EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into, effective as of September 7, 1999
by and between MICREL, INCORPORATED, a California corporation (the
"Company"), and Xxxxxxx X. Xxxxxxx, Xx. ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the company and Indemnitee recognize the increased
risk of litigation and other claims currently being asserted against
directors and officers of corporations; and
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued and effective service to the Company, and in order to induce
Indemnitee to provide services to the Company as a director and/or
officer, the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) permitted by California law
and as set forth in this Agreement, and, to the extent insurance is
maintained, for the coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of
Indemnitee's continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound
hereby, the parties agree as follows:
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) Change in Control: shall be deemed to have
occurred if (I) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Act"),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the company or a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes
the "Beneficial Owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the company representing 30% or
more of the total voting power represented by the Company's then
outstanding Voting Securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board or
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period of whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority of the Board, or, or (iii) the
shareholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation
that would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by
the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (iv) the
shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company
(in one transaction or a series of transactions) of all or substantially
all of the Company's assets.
(c) Expenses: any expense, liability, or loss, including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any
payments under this Agreement, paid or incurred in connection with
investigating, defending, being a witness in, or participating in
(including on appeal), or preparing for any of the foregoing in, any
Proceeding relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
that takes place either prior to or after the execution of this
Agreement, related to the fact that Indemnitee is or was a director or
an officer of the company, or while a director or officer is or was
serving at the request of the Company as a director, officer, employee,
trustee, agent, or fiduciary of another foreign or domestic corporation,
partnership, joint venture, employee benefit plan, trust, or other
enterprise, or was a director, officer, employee, or agent of a foreign
or domestic corporation that was a predecessor corporation of the
Company or of another enterprise at the request of such predecessor
corporation, or related to anything done or not done by Indemnitee in
any such capacity, whether or not the basis of the Proceeding is alleged
action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director, officer,
employee, or agent of the Company, as described above.
(e) Independent Counsel: the person or body
appointed in connection with Section 3.
(f) Potential Change in Control: shall be deemed to
have occurred if (I) the Company enters into an agreement or
arrangement, the consummation of which would result in the occurrence of
a Change in Control; (ii) any person (including the Company) publicly
announces an intention to take or to consider taking actions that, if
consummated, would constitute a Change in Control; (iii) any person
(other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a
corporation owned, substantially the same proportions as their ownership
of stock of the Company), who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's then outstanding
Voting Securities, increase his beneficial ownership of such securities
by 5% or more over the percentage so owned by such person on the date
hereof, or (iv) the board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(g) Proceeding: (I) any threatened, pending, or
completed action, suit, or proceeding, or whether civil, criminal,
administrative, investigative, or other; (ii) any inquiry, hearing, or
investigation, whether conducted by the Company or any other party, that
Indemnitee in good faith believes might lead to the institution of any
such action, suit, or proceeding.
(h) Reviewing Party: the person or body appointed in
accordance with Section 3.
(I) Voting Securities: any securities of the Company
that vote generally in the election of officers.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee
was, is, or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, a
Proceeding by reason of (or arising in part out of) an Indemnifiable
Event, the company shall indemnify Indemnitee from and against any and
all Expenses to the fullest extent permitted by law, as the same exits
or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the company to provide broader indemnification
rights than were permitted prior thereto). The parties hereto intend
that this Agreement shall provide for indemnification in excess of that
expressly permitted by statute, including, without limitation, any
indemnification provided by the Company's Articles of Incorporation, its
bylaws, vote of its shareholders or disinterested directors, or
applicable law.
(b) Initiation of Proceeding. Notwithstanding anything
in this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee against the Company or any director
or officer of the Company unless (i) the Company has joined in or the
Board has consented to the initiation of such Proceeding; (ii) the
Proceeding is one to enforce indemnification rights under Section 5; or
(iii) the Proceeding is instituted after a Change in Control and
Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee,
the Company shall advance (within ten business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance"); proved that, if
and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid.
If Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, as provided in Section 4, any
determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding
and Indemnitee shall not be required to reimburse the Company for any
Expense Advance unit a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted
or have lapsed). Indemnitee's obligation to reimburse the Company for
Expense Advances shall be unsecured and no interest shall be charged
thereon.
(d) Mandatory Indemnification. Notwithstanding
any other provision of this Agreement (other than Section 2(f) below),
to the extent that Indemnitee has been successful on the merits in
defense or any Proceeding relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
(e) Partial Indemnification. If Indemnitee is
entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of Expense, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification
pursuant to this Agreement shall be paid by the Company on account of
any Proceeding in which judgment is rendered against Indemnitee for an
accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of
the Act or similar provisions of any federal, state or local laws.
3. Reviewing Party. Prior to any Change in Control, the
Reviewing Party shall be any appropriate person or body consisting of a
member or members of the Board or any other person or body appointed by
the board who is not a party to the particular Proceeding with respect
to which Indemnitee is seeking indemnification; after a Change in
Control, the Reviewing Party shall be the Independent Counsel referred
to below. With respect to all matters arising after a Change in Control
(other than a Change in Control approved by a majority of the directors
on the Board who were directors immediately prior to such Change in
Control) concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or under
applicable law or the company's Articles of Incorporation of bylaws now
or hereafter in effect relating to indemnification for Indemnifiable
Events, the Company shall seek legal advice only from Independent
Counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not otherwise
performed services for the Company or the Indemnitee (other than in
connection with indemnification matters ) within the last five years.
The Independent Counsel shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have
a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee's rights under this Agreement.
Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the
Indemnitee should be permitted to be indemnified under applicable law.
the Company agrees to pay the reasonable fees of the Independent Counsel
and to indemnify fully such counsel against any and all expenses
(including attorney's fees), claims, liabilities, loss, and damages
arising out of or relating to this Agreement or the engagement of
Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall
be entitled to indemnification of Expenses, and shall receive payment
thereof, from the Company in accordance with this Agreement as soon as
practicable after Indemnitee has made written demand on the company for
indemnification, unless the Reviewing Party has given a written opinion
to the company that Indemnitee is not entitled to indemnification under
applicable law.
(b) Suit to Enforce Rights. Regardless of any
action by the Reviewing Party, if Indemnitee has not received full
indemnification within thirty days after making a demand in accordance
with Section 4(a), Indemnitee shall have the right to enforce its
indemnification rights under this Agreement by commencing litigation in
any court in the State of California having subject matter jurisdiction
thereof and in which venue is proper seeking an initial determination by
the court or challenging any determination by the Reviewing Party or any
aspect thereof. The Company hereby consents to service of process and
to appear in any such proceeding. any determination by the Reviewing
Party not challenged by the Indemnitee shall be binding on the company
and Indemnitee. The remedy provided for in this Section 4 shall be in
addition to any other remedies available to Indemnitee in law or equity.
(c) Defense to Indemnification, Burden of Proof, and
Presumptions. It shall be a defense to any action brought by Indemnitee
against the Company to enforce this Agreement (other than an action
brought to enforce a claim for Expenses incurred in defending a
Proceeding in advance of its final disposition where the required
undertaking has been tendered to the Company) that it is not permissible
under applicable law for the company to indemnify Indemnitee for the
amount claimed. In connection with any such action or any determination
by the Reviewing Party or otherwise as to whether Indemnitee is entitled
to be indemnified hereunder, the burden of proving such a defense or
determination shall be on the Company. Neither the failure of the
Reviewing Party or the company (including its board, independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such action by Indemnitee that indemnification of the
claimant is proper under the circumstances because Indemnitee has met
the standard of conduct set forth in applicable law, nor an actual
determination by the Reviewing Party of Company (including it Board,
independent counsel, or its shareholders) that the Indemnitee had not
met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit, or proceeding, by judgment,
order settlement (whether with or without court approval), conviction,
or upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights.
The Company shall indemnify Indemnitee against any and all
Expenses and, if requested by Indemnitee, shall (within ten business
days of such request), advance such Expenses to Indemnitee, that are
incurred by Indemnitee in connection with any claim asserted against or
action brought by Indemnitee for
(i) Indemnification of Expenses or Expense Advances by the
Company under this Agreement or any other agreement or under applicable
law or the company's Articles of Incorporation or Bylaws now or
hereafter in effect relating to indemnification for Indemnifiable
Events, and/or
(ii) recovery under directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, Expense Advances, or insurance recovery, as the case
may be.
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee
shall, if a claim in respect thereof is to be made against the Company
under this Agreement, notify the Company of the commencement thereof;
but the omission so to notify the Company will not relieve the Company
from any liability that it may have to Indemnitee, except as provided in
Section 6(c).
(b) Defense. With respect to any Proceeding as to
which Indemnitee notifies the Company of the commencement thereof, the
Company shall be entitled to participate in the Proceeding at its own
expense and except as otherwise provided below, to the extent the
Company so wishes, it may assume the defense thereof with counsel
reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election to assume the defense of any Proceeding, the
Company shall not be liable to Indemnitee under this Agreement or
otherwise for any Expenses subsequently incurred by Indemnitee in
connection with the defense of such Proceeding other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall
have the right to employ his or her own legal counsel in such
Proceeding, but all Expenses related thereto incurred after notice from
the Company of its assumption of the defense shall be at Indemnitee's
expense unless: (I) the employment of legal counsel by Indemnitee has
been authorized by the Company, (ii) Indemnitee has reasonably
determined that there may be a conflict of interest between Indemnitee
and the Company in the defense of the Proceeding, (iii) after a Change
in Control, the employment of counsel by Indemnitee has been approved by
the Independent Counsel, or (iv) the Company shall not in fact have
employed counsel to assume the defense of such Proceeding, in each of
which case all Expenses of the Proceeding shall be borne by the company.
The company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the determination provided for in (ii) above.
(c) Settlement of Claims. The Company shall not be
liable to indemnify Indemnitee under this Agreement or otherwise for any
amounts paid in settlement of any Proceeding effected without the
Company's written consent, provided, however, that if a Change in
Control has occurred, the Company shall be liable for indemnification of
Indemnitee for amounts paid in settlement if the Independent counsel has
approved the settlement. The Company shall not settle any Proceeding in
any manner that would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed
settlement. The Company shall not be liable to indemnify the Indemnitee
under this Agreement with regard to any judicial award if the Company
was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action; the Company's liability
hereunder shall not be excused if participation in the Proceeding by the
Company was barred by this Agreement.
7. Establishment of Trust. In the event of a Change in
Control or a Potential Change in Control, the Company shall, upon
written request by Indemnitee, create a Trust for the benefit of the
Indemnitee and from time to time upon written request of Indemnitee
shall fund the Trust in an amount sufficient to satisfy any and all
Expense reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for, participating
in, and/or defending any Proceeding relating to an Indemnifiable Event.
The amount or amounts to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by the Reviewing Party.
The terms of the Trust shall provide that upon a Change in Control, (I)
the Trust shall not be revoked or the principal thereof invaded, without
the written consent of the Indemnitee, (ii) the Trustee shall advance,
within ten business days of a request by the Indemnitee, any and all
Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the Trust under the same circumstances for which the
Indemnitee would be required to reimburse the Company under Section 2(c)
of this Agreement), (iii) the Trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above, (iv)
the Trustee shall promptly pay to the Indemnitee all amounts for which
the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in the Trust shall
revert to the Company upon a final determination by the Reviewing Party
or a court of competent jurisdiction, as the case may be, that the
Indemnitee has been fully indemnified under the terms of this Agreement.
The Trustee shall be chosen by the Indemnitee. Nothing in this Section
7 shall relieve the Company of any of its obligations under this
Agreement. All income earned on the assets held in the Trust shall be
reported as income by the Company for federal, state, local, and foreign
tax purposes. The Company shall pay all costs of establishing and
maintaining the Trust and shall indemnify the Trustee against any and
all expenses (including attorneys' fees), claims, liabilities, loss, and
damages arising out of or relating to this Agreement or the
establishment and maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder
shall be in addition to any other rights Indemnitee may have under the
Company's Articles of Incorporation, Bylaws, applicable law, or
otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Articles
of Incorporation, Bylaws, applicable law, or this Agreement, it is the
intent of the parties that Indemnitee enjoy by this Agreement the
greater benefits so afforded by such change.
9. Liability Insurance. To the extent the company
maintains an insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by such
policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company director or
officer.
10. Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or on behalf of the
company or any affiliate of the Company 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, or such longer period as may be required by state law under the
circumstances. Any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within such period; provided,
however that if any shorter period of limitations is otherwise
applicable to any such cause of action the shorter period shall govern.
11. Amendment of this Agreement. 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 operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver. Except as specifically provided herein,
no failure to exercise or any delay in exercising any right or remedy
hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this
Agreement, the Company shall be subjugated to the extent of such payment
to all of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to
enable the Company effectively to bring suite to enforce such rights.
13. No Duplication of Payments. The Company 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
received payment (under any insurance policy, Bylaw, or otherwise) of
the amounts otherwise Indemnifiable hereunder.
14. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors (including any direct or indirect successor
by purchase, merger, consolidation, or otherwise to all or substantially
all of the business and/or assets of the Company), assigns, spouses,
heirs, and personal and legal representatives. The Company 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 Company, 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 Company would be required to
perform if no such succession had taken place. The indemnification
provided under this Agreement shall continue as to Indemnitee for any
action taken or not taken while serving in an indemnified capacity
pertaining to an Indemnifiable Event even though he or she may have
ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion
thereof) of this Agreement shall be held by a court of competent
jurisdiction to be invalid, void, or otherwise unenforceable, the
remaining provision shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each
portion of this Agreement containing any provision held to be invalid,
void, or otherwise unenforceable, that is not itself invalid, void, or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
California applicable to contracts made and to be performed in such
State without giving effect to the principles of conflicts of laws.
17. Notices. All notices, demands, and other
communications required or permitted hereunder shall be made in writing
and shall be deemed to have been duly given if delivered by hand,
against receipt, or mailed, postage prepaid, certified or registered
mail, return receipt requested, and addressed to the Company at:
Micrel, Incorporated
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
and to Indemnitee at:
Xxxxxxx X. Xxxxxxx, Xx.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Notice of change of address shall be effective only when given in
accordance with this Section. All notices complying with this Section
shall be deemed to have been received on the date of delivery or on the
third business day after mailing.
18. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement as of the day specified above.
MICREL, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Title: Vice President, Secretary
INDEMNITEE:
/s/ Xxxxxxx X. Xxxxxxx, Xx.
---------------------------
Xxxxxxx X. Xxxxxxx, Xx.
