EXHIBIT 10.75
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of October 9, 1992, between MTI Technology
Corporation, a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxxx (the
"Indemnitee") (the "Agreement").
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 being asserted against directors and
officers of public companies in today's environment; and
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors and officers to the fullest
extent permitted by law, and the Indemnitee has been serving and continues to
serve as a director and/or officer of the Company in part in reliance on the
Bylaws;
WHEREAS, in recognition of Indemnitee's need for (i) substantial
protection against personal liability based on Indemnitee's reliance on the
aforesaid Bylaws, (ii) specific contractual assurance that the protection
promised by the Bylaws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of the Bylaws or any change in the
composition of the Company's Board of Directors or acquisition transaction
relating to the Company), and (iii) an inducement to continue to provide
effective services to the Company as a director or officer thereof, the Company
wishes to provide for the indemnification of Indemnitee and to advance expenses
to Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, to provide for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies.
NOW, THEREFORE, in consideration of the premises contained herein
and of Indemnitee continuing to serve the Company directly or, at its request,
with another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:
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1. Certain Definitions:
(a) "Affiliate": any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
(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), other than (a) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
(b) a corporation owned directly or indirectly by the stockholders 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
said Act), directly or indirectly, of securities of the Company representing 20%
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 of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders 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 or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which 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 the stockholders 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) Expense: includes attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Proceeding relating
to any Indemnifiable Event.
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(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 corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise or
by reason of anything done or not done by Indemnitee in any such capacity.
(e) 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 which it consummated would constitute a Change
in Control, (iii) any person, other than (x) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in
such capacity, or (y) a corporation owned, directly or indirectly, by the
stockholders of the Company in 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,
increases 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.
(f) Proceeding: any threatened, pending or completed action,
suit or proceeding, or 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, whether civil,
criminal, administrative, investigative or other.
(g) Reviewing Party: any appropriate person or body
consisting of a member or members of the Company's Board of Directors or any
other person or body appointed by the Board (including the special, independent
counsel referred to in section 3) who is not a party to the particular
Proceeding with respect to which Indemnitee is seeking Indemnification.
(h) Voting Securities: any securities of the Company which
vote generally in the election of directors.
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2. Agreement to Indemnify.
(a) 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 to the
fullest extent permitted by law, as soon as practicable but in any event no
later than thirty days after written demand is presented to the Company, against
any and all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Proceeding and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the creation of the
Trust pursuant to Section 4 hereof). Notwithstanding anything in this Agreement
to the contrary and except as provided in Section 5, 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 the Company has joined in or consented to the
initiation of such Proceeding. 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"); provided, however, that such Expenses shall
be advanced only upon delivery to the Company of an undertaking by or on behalf
of the Indemnitee to repay such amount if it is ultimately determined that
Indemnitee is not entitled to be indemnified by the Company.
(b) Notwithstanding the foregoing, (i) the obligations of
the Company under Section 2(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in any case in
which the special, independent counsel referred to in Section 3 hereof is
involved) that Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make an Expense
Advance pursuant to Section 2(a) shall be subject to the condition that, if,
when 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; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent jurisdiction
to secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under
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applicable law shall not be binding and Indemnitee shall not be required to
reimburse the Company for any Expense Advance until 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. If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
special, independent counsel referred to in Section 3 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of California or Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
3. Change in Control. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such change in Control), then with respect to all matters
thereafter arising 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 Certificate of Incorporation or Bylaws now or hereafter in
effect relating to indemnification for Indemnifiable Events, the Company shall
seek legal advice only from special, independent counsel selected by Indemnitee
and approved by the company (which approval shall not be unreasonably withheld).
Such special, independent counsel shall not have otherwise performed services
for the Company or the Indemnitee (other than in connection with such matters)
within the last five years. Such 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 would
be permitted to be indemnified under applicable law.
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The company agrees to pay the reasonable fees of the special, independent
counsel referred to above and to indemnify fully such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or the engagement of special,
independent counsel pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change in
Control, the company shall, upon written request by Indemnitee, create a trust
for the benefit of the Indemnitee (the "Trust") and from time to time upon
written request of Indemnitee shall fund such Trust in an amount sufficient to
satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with investigating, preparing for and
defending any Proceeding relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and all Proceedings
relating to an Indemnifiable Event from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The amount or amounts to be
deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Party, in any case in which the special, independent
counsel referred to above is involved. 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, upon
Indemnitee's having made the undertaking required under Section 2(a) hereof, any
and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the Trust under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) 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 such 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 4 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.
5. Indemnification for Expenses Incurred in Enforcing this
Agreement. The Company shall indemnify Indemnitee against any and all expenses
(including attorneys'
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fees), and, if requested by Indemnitee, shall (within ten business days of such
request, advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any claim asserted against or action brought by Indemnitee
for (i) indemnification or advance payment of Expenses by the company under this
Agreement or any other agreement or relating to indemnification for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be. Expenses
shall be advanced, however, only upon delivery to the Company of an undertaking
by or on behalf of the Indemnitee to repay such amount if it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company.
6. Partial Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Proceeding but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof 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 Proceedings relating in
whole or in part to an Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
7. Defense to Indemnification, Burden of Proof and Presumptions.
It shall be a defense to any action brought by the 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 the Indemnitee has not met the standards of conduct that make it
permissible under the Delaware General Corporation Law for the Company to
indemnify the Indemnitee for the amount claimed. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proving such right to
indemnification shall be on the Indemnitee. 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
action by the Indemnitee that indemnification of the claimant is proper under
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General
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Corporation Law, nor an actual determination by the Company (including its Board
of Directors, independent legal counsel, or its stockholders) 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) or 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.
8. Non-exclusivity. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Certificate of Incorporation or Bylaws or the Delaware General Corporation Law
or otherwise; provided, however, that this Agreement shall supersede any prior
indemnification by agreement between the Company and the Indemnitee. To the
extent that a change in the Delaware General Corporation Law (whether by statute
or judicial decision) permits greater indemnification by agreement than would be
afforded currently under the Company's Certificate of Incorporation and Bylaws
and this Agreement, it is the intent of the parties hereto that Indemnitee shall
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, and 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, such shorter period shall govern.
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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 or the provisions of this Agreement
shall be deemed or shall constitute 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 subrogated 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 suit 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 actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
14. Settlement of Claims. The Company shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without the company's written consent. 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.
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.
15. 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, assigns, 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, 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 the
Indemnitee, expressly to assume and agree to
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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. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as a director or officer of the company or of any other enterprise at the
Company's request.
16. Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions 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, illegal or
unenforceable.
17. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state or Delaware
applicable to contracts made and to be performed in such State without giving
effect to the principles of conflicts of laws.
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.
19. 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:
MTI Technology Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Secretary
and to Indemnitee at:
0000 XXXXX XXXXXX XXX
XXXXX XXXXX, XX 00000
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Notice of change of address shall be effective only when done 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.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day first set forth above.
MTI TECHNOLOGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
President
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
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