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INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made as of the ____
day of ___________, 1999, by and between Advanced Switching Communications,
Inc., a Delaware corporation (the "Corporation"), and __________________
("Indemnitee"), a director of the Corporation.
RECITALS:
A. It is essential to the Corporation to retain and attract as directors
and officers of the Corporation the most capable persons available.
B. The substantial increase in corporate litigation subjects directors
and officers to expensive litigation risks at the same time that the
availability of directors' and officers' liability insurance has been severely
limited.
C. It is the express policy of the Corporation to indemnify directors and
officers of the Corporation so as to provide them with the maximum possible
protection permitted by law.
D. Indemnitee does not regard the protection available under the Delaware
General Corporation Law or the Bylaws of the Corporation as 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 Corporation desires
Indemnitee to serve in such capacity.
AGREEMENTS
NOW, THEREFORE, the Corporation and Indemnitee do hereby agree as follows:
1. Agreement to Serve
Indemnitee agrees to serve or continue to serve as a director and/or
an officer of the Corporation for so long as he is duly elected or appointed or
until such time as he tenders his resignation in writing.
The term "Proceeding" shall include any threatened, pending or
completed action, suit, investigation or proceeding, and any appeal thereof,
whether brought by or in the right of the Corporation or otherwise and whether
civil, criminal, administrative or investigative, and/or any inquiry or
investigation, in which Indemnitee may be or may have been involved as a party
or otherwise, or that Indemnitee in good faith believes might lead to the
institution of any such proceeding, by reason of the fact that Indemnitee is or
was a director or officer of the Corporation, by reason of any action taken by
him or
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of any inaction on his part while acting as such a director or officer, or by
reason of the fact that he is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise; in each case whether or not he is
acting or serving in any such capacity at the time any liability or expense is
incurred for which indemnification or reimbursement can be provided under this
Agreement.
The term "Expenses" shall include, without limitation, expenses, costs
and obligations, paid or incurred, of investigations, judicial or administrative
proceedings or appeals, amounts paid in settlement by or on behalf of
Indemnitee, attorneys' fees and disbursements and any expenses reasonably and
actually incurred in establishing a right to indemnification under Section 8 of
this Agreement [including, without limitation, those incurred in investigating,
defending, being a witness in or participating in (including an appeal), or
preparing to defend with respect to any claim, issue or matter relating thereto
or in connection therewith], but shall not include the amount of judgments,
fines or penalties against Indemnitee.
A "Change in Control" shall be deemed to have occurred if, after the
date hereof, there is any transaction or series of transactions within any
twelve (12)-month period, including, without limitation, a merger, consolidation
or exchange of securities, in which the holders of all of the Corporation's
outstanding voting securities immediately prior to the consummation of such
transaction or the first transaction of such series of transactions do not own,
directly or indirectly, a majority of the combined voting power of the
Corporation's outstanding securities upon consummation of such transaction or
series of such transactions.
The term "Independent Legal Counsel" shall include any attorney or
firm of attorneys, selected in accordance with Section 5 hereof, who shall not
have otherwise performed services for the Corporation or Indemnitee within the
five years prior to the date of selection (other than with respect to matters
concerning the rights of Indemnitee under this Agreement, or of other
Indemnitees under similar indemnification agreements).
References to "other enterprise" shall include employee benefit plans;
reference to "fines" shall include any excise tax assessed with respect to any
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation or any subsidiary 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.
2. Indemnity in Third-Party Proceedings.
The Corporation shall indemnify Indemnitee in accordance with the
provisions of this Agreement if Indemnitee is a party to or threatened to be
made a party to any Proceeding (other than a Proceeding by or in the right of
the Corporation or any
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subsidiary of the Corporation to procure a judgment in its favor) by reason of
the fact that Indemnitee is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, against all Expenses, judgments, fines and penalties actually
and reasonably incurred by Indemnitee in connection with the defense or
settlement of such Proceeding, but only if he acted in good faith and in a
manner which he reasonably believed to be (in the case of conduct in his
official capacity) in the best interests of the Corporation or (in all other
cases) not opposed to the best interests of the Corporation, and, in the case of
a criminal action or proceeding, in addition, had no reasonable cause to believe
that his conduct was unlawful. The termination of any such Proceeding by
judgment, order of court, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation (or
that Indemnitee did not meet any other particular standard of conduct or have
any other particular belief or that a court has determined that indemnification
is not permitted by applicable law), and with respect to any criminal
proceeding, that such person had reasonable cause to believe that his conduct
was unlawful.
3. Indemnity in Proceedings by or in the Right of the Corporation
The Corporation shall indemnify Indemnitee in accordance with the
provisions of this Agreement if Indemnitee is a party to or threatened to be
made a party to any Proceeding by or in the right of the Corporation or any
subsidiary of the Corporation to procure a judgment in its favor by reason of
the fact that Indemnitee is or was a director or officer of the Corporation or
any subsidiary of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all Expenses
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such Proceeding, but only if he acted in good faith and in a
manner which he reasonably believed to be (in the case of conduct in his
official capacity) in the best interests of the Corporation or (in all other
cases) not opposed to the best interests of the Corporation, except that no
indemnification for Expenses shall be made under this Section 4, in respect of
any Proceeding as to which Indemnitee shall have been adjudged to be liable to
the Corporation, unless and only to the extent that any court in which such
Proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper. Notwithstanding the foregoing, Indemnitee shall
have no right to indemnification for Expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
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4. Change in Control
The Corporation agrees that in the event of a Change in Control, and
with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnification and payment of Expenses under this Agreement or
any other agreement to which the Corporation and Indemnitee are parties or the
Bylaws of the Corporation or any subsidiary as hereafter in effect relating to
indemnification of directors and/or officers of the Corporation or any such
subsidiary, the Corporation shall seek legal advice only from the Independent
Legal Counsel selected by Indemnitee and approved by the Corporation (which
approval shall not be unreasonably withheld). Such counsel, among other things,
shall render its written opinion to the Corporation and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Corporation agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorney's fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
5. Indemnification Prohibited. Notwithstanding the provisions of
Sections 3 and 4, no indemnification shall be made in connection with any
Proceeding charging improper personal benefit to Indemnitee, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by Indemnitee.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement whatsoever, to the extent that Indemnitee has
been successful on the merits or otherwise (including a settlement) in defense
of any Proceeding or in defense of any claim, issue or matter therein,
including dismissal without prejudice, Indemnitee shall be indemnified against
all Expenses reasonably and actually incurred in connection therewith.
7. Advances of Expenses. Expenses incurred by Indemnitee pursuant to
Sections 3 and 4 in any Proceeding shall be paid by the Corporation in advance
as soon as practicable but not later than three business days after receipt of
the written request of Indemnitee provided that Indemnitee shall (i) affirm in
such written request that he acted in good faith and in a manner which he
reasonably believed to be (in the case of conduct in his official capacity) in
the best interests of the Corporation or (in all other cases) not opposed to the
best interests of the Corporation and (ii) undertake to repay such amount to the
extent that is ultimately determined that Indemnitee is not entitled to
indemnification, and further provided that a determination has been made that
the facts then known would not preclude indemnification pursuant to the terms of
this Agreement.
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8. Right of Indemnitee to Indemnification Upon Application; Procedure
Upon Application
Any indemnification under Sections 3 and 4 shall be made as soon as
practicable but in any event no later than 30 days after receipt by the
Corporation of the written request of Indemnitee.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advances are not appropriate shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or stockholders) to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or stockholders)
that Indemnitee has not met such applicable standard conduct, shall be a defense
to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct. Indemnitee's expenses reasonably incurred in connection
with successfully establishing Indemnitee's right to indemnification or
advances, in whole or in part, in any such Proceeding shall also be indemnified
by the Corporation.
The Corporation 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.
9. Indemnification Hereunder Not Exclusive
Notwithstanding any other provision of this Agreement, the Corporation
hereby agrees to indemnify Indemnitee to the full extent permitted by law,
whether or not such indemnification is specifically authorized by the other
provisions of this Agreement, the Corporation's Certificate of Incorporation,
the Bylaws, or by statute. In the event of any changes, after the date of this
Agreement, in any applicable law, statute, or rule which expand the right of a
Delaware corporation to indemnify a member of its board of directors or any
officer, such changes shall be, ipso facto, within the purview of Indemnitee's
rights, and Corporation's obligations, under this Agreement. In the event of any
changes in any applicable law, statute, or rule which narrow the right of a
Delaware corporation to indemnify a member of its board of directors or any
officer, such changes, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement, shall have no effect on this Agreement
or the parties' rights and obligations hereunder.
The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the
Certificate of Incorporation, the Bylaws, any agreement, any vote of
shareholders or disinterested
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directors, the laws of the State of Delaware or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
10. Partial Indemnification
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonably incurred by him in the
investigation, defense, appeal or settlement of any Proceeding but not, however,
for the total amount thereof, the Corporation shall nevertheless indemnify
Indemnitee for the portion of such Expenses, judgments, fines or penalties 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, issues or matters relating in
whole or in part to an indemnifiable event, occurrence or matter hereunder,
including dismissal without prejudice, Indemnitee shall be indemnified against
all Expenses incurred in connection with such defenses.
11. Effect of Federal Law
Both the Corporation and Indemnitee acknowledge that in certain
instances, federal law will override Delaware law and prohibit the Corporation
from indemnifying its offices and directors. For example, the Corporation and
Indemnitee acknowledge that the Securities and Exchange Commission has taken the
position that indemnification is not permissible for liabilities arising under
certain federal securities law, and federal law prohibits indemnification for
certain violations of the Employee Retirement Income Security Act.
12. Liability Insurance
The Corporation shall from time to time make the good faith
determination whether or not it is practicable for the Corporation to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the officers and directors with coverage for losses from wrongful
acts, or to ensure the Corporation's performance of its indemnification
obligations under this Agreement. Among other considerations, the Corporation
will weigh the costs of obtaining such insurance against the protection afforded
by such coverage.
Indemnitee hereby releases the Corporation and its respective
authorized representatives from any claims for indemnification hereunder if and
to the extent that Indemnitee receives proceeds from any liability insurance
policy or other third-party source in payment or reimbursement for such claims.
Indemnitee hereby agrees to assign all proceeds Indemnitee receives under any
such insurance policy or third-party agreement to the extent of the amount of
indemnification made to Indemnitee under the terms of this Agreement. Finally,
Indemnitee shall cause each insurance policy or other third-party agreement by
which Indemnitee may be entitled to payment or reimbursement
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to provide that the insurance company or the third-party agreement by which
Indemnitee may be entitled to payment or reimbursement to provide that the
insurance company or the third party waives all right of recovery by way of
subrogation against the Corporation in connection with any claim for
indemnification under this Agreement. If such waiver of subrogation cannot be
obtained except with the payment of additional sums in premiums or otherwise,
Indemnitee shall notify the Corporation of this fact. The Corporation shall
then have ten (10) days after receiving such notice to agree to pay such
additional sums. If a waiver of subrogation rights is not obtainable at any
price or if the Corporation shall fail to agree to pay such additional sums,
Indemnitee shall be relieved of the obligation to obtain the waiver of
subrogation rights with respect to any particular insurance policy or
third-party agreement.
13. Saving Clause
Nothing in this Agreement is intended to require or shall be
construed as requiring the Corporation to do or fail to do any act in violation
of applicable law. The provisions of this Agreement (including any provision
within a single section, paragraph or sentence) shall be severable in
accordance with this Section 14. If this Agreement or any portion thereof shall
be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines and penalties with respect to any Proceeding to the full extent permitted
by any applicable portion of this agreement that shall not have been
invalidated or by any other applicable law, and this Agreement shall remain
enforceable to the fullest extent permitted by law.
14. Notice
Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give to the Corporation notice in writing as
soon as practicable of any claim made against him for which indemnity will or
could be sought under this Agreement. Notice to the Corporation shall be
directed to Advanced Switching Communications, Inc., 0000 Xxxxx Xxxx., 0xx
Xxxxx, Xxxxxx, XX 00000 Attention: President (or such other address as the
Corporation shall designate in writing to Indemnitee). All notices, requests,
demands and other communications shall be deemed received three days after the
date postmarked if (i) delivered by hand and receipted for by the party to whom
such notice or other communication shall have been directed, or (ii) sent by
prepaid mail, properly addressed. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require and
shall be within Indemnitee's power.
15. Applicable Law
This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Delaware without giving effect to its
rules of conflicts of laws.
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16. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties and their respective successors and assigns
(including any direct or indirect successors by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or assets of the
Corporation), spouses, heirs, and personal and legal representatives. The
Corporation 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 Corporation, 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 Corporation 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 Corporation
or of any other enterprise.
17. Attorney's Fees
In the event that any action is instituted by Indemnitee under this
Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be
entitled to be paid all court costs and expenses, including reasonable
attorneys' fees and disbursements, incurred by Indemnitee with respect to such
action, unless as a part of such action, the court of competent jurisdiction
determines that each of the material assertions made by Indemnitee as a basis
for such action were not made in good faith or were frivolous. In the event of
an action instituted by or in the name of the Corporation under this Agreement
or to enforce or interpret any of the terms of this Agreement, Indemnitee shall
be entitled to be paid all court costs and expenses, including attorneys' fees
and disbursements, incurred by Indemnitee in defense of such action (including
with respect to Indemnitee's counterclaims and crossclaims made in such
action), unless as a part of such action the court determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
18. Subsequent Instruments and Acts
The parties hereto agree that they will execute any further
instrument and perform any acts that may become necessary from time to time to
carry out the terms of this Agreement.
19. Limitations Period
No legal action shall be brought and no cause of action shall be
asserted by or in the right of the Corporation or any affiliate of the
Corporation 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 Corporation or its affiliates shall be extinguished and
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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.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
duly executed and signed as of the day and year first above written.
ADVANCED SWITCHING COMMUNICATIONS, INC.,
a Delaware corporation
By:
________________________________
Chief Financial Officer
INDEMNITEE:
_________________________________
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