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EXHIBIT 10.5
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of __________________, is made by and
between Tality Corporation, a Delaware corporation (the "Company"), and
__________________, a __________________ 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 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. The statutes and judicial decisions regarding the duties of directors
and officers area often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors and officers with adequate, reliable
knowledge of legal risks to which they are exposed or information regarding the
proper course of action to take;
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so substantial (whether or not the case is meritorious), that
the defense and/or settlement of such litigation is often beyond the personal
resources of officers and directors;
D. The Company believes that it is unfair for its directors and officers
and the directors and officers of its subsidiaries to assume the risk of large
judgments and other expenses that may be incurred in cases in which the director
or officer received no personal profit and in cases where the director or
officer was not culpable;
E. The Company recognizes that the issues in controversy in litigation
against a director or officer of a corporation such as the Company or a
subsidiary of the Company are often related to the knowledge, motives and intent
of such director or officer, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director
or officer can reasonably recall such matters; and may extend beyond the normal
time for retirement for such director or officer with the result that he, after
retirement or in the event of his death, his spouse, heirs, executors or
administrators, may be faced with limited ability and undue hardship in
maintaining an adequate defense, which may discourage such a director or officer
from serving in that position;
F. 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
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and its subsidiaries and to encourage such individuals to take the business
risks necessary for the success of the Company and its subsidiaries, it is
necessary for the Company to contractually indemnify its officers and directors
and the officers and directors of its subsidiaries in connection with claims
against such persons in connection with their service, and has further concluded
that the failure to provide such contractual indemnification could result in
great harm to the Company and its subsidiaries and the Company's shareholders;
G. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company and/or the
subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or the
subsidiaries of the Company; and
H. The Indemnitee is willing to serve, or to continue to serve, the
Company and/or the subsidiaries of the Company that he is furnished the
indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Covered Person. For purposes of this Agreement, a "covered
person" shall include the Indemnitee and any heir, executor, administrator or
other legal representative of the Indemnitee following his or her death or
incapacity.
(b) 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 either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement,
Section 145 or otherwise.
(c) 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, and including any of the foregoing commenced by or on behalf of the
Company, derivatively or otherwise.
(d) 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, 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 the Company and/or its subsidiaries in his present capacity, so long as he
is duly appointed or elected or until such time as he tenders his resignation in
writing, provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
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3. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, so long as the
Indemnitee shall continue to serve as an officer or director of the Company or
any of its subsidiaries, and thereafter so long as the Indemnitee shall be
subject to any possible proceeding by reason of such service, the Company,
subject to Section 3(b), shall use reasonable efforts to obtain and maintain in
full force and effect directors' and officers' liability insurance ("D&O
Insurance") in reasonable amounts from established and reputable insurers.
(b) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
4. Mandatory Indemnification.
(a) Right to Indemnification. In the event a covered person was or is
made a parity or is threatened to be made a party to or is involved in any
proceeding, by reason of the fact that the Indemnitee is or was a director,
officer or employee of the Company (including any subsidiary or affiliate
thereof or any constituent corporation or any of the foregoing absorbed in any
merger) or is or was serving at the request of the Company (including such
subsidiary, affiliate or constituent corporation) as a director, officer or
employee of another corporation, or of a partnership, joint venture, trust or
other entity, including service with respect to employee benefit plans, such
person shall be indemnified and held harmless by the Company to the fullest
extent permitted by applicable law, against all expenses, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
and other taxes and penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
indemnification shall continue after the Indemnitee has ceased to serve in such
capacity and shall inure to the benefit of his heirs, executors and
administrators; provided, however, that except for a proceeding pursuant to
Section 7, the Company shall indemnify any such person in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Company.
(b) Exception for Amounts Covered by Insurance. Notwithstanding the
foregoing, the Company shall not be obligated to indemnify a covered person 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) which have been paid directly to such person by D&O Insurance.
(c) Partial Indemnification. If a covered person 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
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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 such person for such total amount except as to the
portion thereof to which the Indemnitee is not entitled.
5. Mandatory Advancement of Expenses. The Company shall pay all expenses
incurred by a covered person, or in defending any such proceeding as they are
incurred in advance of its final disposition; provided, however, that if the
Delaware General Corporations Law then so requires, the payment of such expenses
incurred in advance of the final disposition of such proceeding shall be made
only upon delivery to the Company of an undertaking, by or on behalf of such
covered person, to repay all amounts so advanced if it should be determined
ultimately that such person is not entitled to the payment of such expenses by
the Company.
6. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by a covered person of notice of the
commencement of or the threat of commencement of any proceeding, such person
shall, if such person 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.
(b) If, at the time of the receipt of a notice of the commencement of
a proceeding, 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 take all necessary or desirable action to cause such insurers
to pay, on behalf of the covered person, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.
(c) In the event the Company shall be obligated to advance the
expenses for any proceeding against the covered person, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the covered person (such approval not to be unreasonably
withheld), upon the delivery to the covered person of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the covered person and the retention of such counsel by the Company, the Company
will not be liable to the covered person under this Agreement for any fees of
counsel subsequently incurred by the covered person with respect to the same
proceeding, provided that (i) the covered person shall have the right to employ
separate counsel in any such proceeding at the covered person's expense; and
(ii) if (A) the employment of counsel by the covered person has been previously
authorized by the Company, (B) the covered person shall have reasonably
concluded that there may be a conflict of interest between the Company the
covered person in the conduct of any such defense of (C) the Company shall not,
in fact, have employed counsel to assume the defense of such proceeding, the
fees and expenses of the covered person's counsel shall be at the expense of the
Company.
7. Right of Indemnitee to Bring Suit. If a claim for indemnification
or advancement of expenses hereunder is not paid in full by the Company within
sixty days after a written claim has been received by the Company, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the covered person may
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at any time thereafter bring suit against the Company to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Company to recover and advancement of expenses pursuant to
the terms of an undertaking, the covered person shall be entitled to be paid
also the expense of prosecuting or defending such suit. In (i) any suit brought
by a covered person to enforce a right to indemnification hereunder (but not in
a suit brought by a covered person to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit by the Company to
recover an advancement of expenses pursuant to the terms of an undertaking the
Company shall be entitled to recover such expenses upon a final adjudication
that, indemnification is not permitted by applicable law. Neither the failure of
the Company (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the covered person is proper in the circumstances,
nor an actual determination by the Company (including its Board of Directors,
independent legal counsel or its stockholders) that indemnification is not
proper, shall create a presumption that the covered person is not entitled to
indemnification or, in the case of such a suit brought by a covered person, be a
defense to such suit. In any suit brought by a covered person to enforce a right
to indemnification or to an advancement of expenses hereunder, or by the Company
to recover an advancement of expenses pursuant to the terms of an undertaking,
the burden of proving that the covered person is not entitled to be indemnified,
or to such advancement of expenses, shall be on the Company.
8. Limitation of Actions and Release of Claims. No proceeding shall be
brought and no cause of action shall be asserted by or on behalf of the Company
or any subsidiary against the Indemnitee, his spouse, heirs, estate, executors
or administrators after the expiration of one year from the act or omission of
the Indemnitee upon which such proceeding is based; however, in a case where the
Indemnitee fraudulently conceals the facts underlying such cause of action, no
proceeding shall be brought and no cause of action shall be asserted after the
expiration of one year from the earlier of (i) the date the Company or any
subsidiary of the Company discovers such facts, or (ii) the date the Company of
any subsidiary of the Company could have discovered such facts by the exercise
of reasonable diligence. Any claim or cause of action of the Company or any
subsidiary of the Company, including claims predicated upon the negligent act or
omission of the Indemnitee, shall be extinguished and deemed released unless
asserted by filing of a legal action within such period. This Section 8 shall
not apply to any cause of action which has accrued on the date hereof and of
which the Indemnitee is aware on the date hereof, but as to which the Company
has no actual knowledge apart from the Indemnitee's knowledge.
9. 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 or any covered person may have under any
provision of law, the Company's Certificate of Incorporation or Bylaws, the vote
of the Company's shareholders or disinterested directors, other agreements, or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an officer, director or employee of the
Company, and the Indemnitee's right hereunder shall continue after the
Indemnitee has ceased to so act and shall inure to the benefit of any heir,
executor, administrator or other legal representative of the Indemnitee.
Notwithstanding the foregoing, the prior indemnification agreement, executed by
the Indemnitee on __________, is superceded by this Agreement.
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10. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
11. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, (i)
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 (ii) 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 Section 10
hereof.
12. 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.
13. 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.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)if
delivered by hand and receipted for by the party addressee or (ii) 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.
15. 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.
16. 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 above written.
TALITY CORPORATION
By
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Its
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Address: 0000 Xxxxx Xxxxxx, Xxxxxxxx 0
Xxx Xxxx, XX 00000
INDEMNITEE
By
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Address:
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