Attached files
| file | filename |
|---|---|
| 8-K - STANDARD MICROSYSTEMS CORP | v165035_8k.htm |
| EX-10.1 - STANDARD MICROSYSTEMS CORP | v165035_ex10-1.htm |
| EX-10.4 - STANDARD MICROSYSTEMS CORP | v165035_ex10-4.htm |
| EX-10.3 - STANDARD MICROSYSTEMS CORP | v165035_ex10-3.htm |
| EX-10.5 - STANDARD MICROSYSTEMS CORP | v165035_ex10-5.htm |
Exhibit
10.2
EMPLOYMENT
AGREEMENT
This
amended and restated EMPLOYMENT AGREEMENT is made as of October 1, 2008 (the
“Agreement”),
among Standard Microsystems Corporation, a Delaware corporation (the “Employer” or “SMSC”), and Christine
King (the “Employee”).
1. Employment, Duties and
Agreements.
(a) The
Employer hereby agrees to employ the Employee as its Chief Executive Officer,
and the Employee shall serve, subject to shareholder election after her initial
appointment, without additional compensation, as a member of the Board of
Directors of the Employer (the “Board”), subject to
the By-laws of the Employer, as applicable, and the Employee hereby accepts such
positions and agrees to serve the Employer in such capacities during the
employment period fixed by Section 3 hereof (the “Employment
Period”). The Employee shall report to the Board and shall
have such duties, authority and responsibilities, and shall act in accordance
with all reasonable instructions and directions of the Board and of the
Employer, in each case, as are consistent with her position as Chief Executive
Officer of the Employer.
(b) During
the Employment Period, excluding any periods of vacation and sick leave to which
the Employee is entitled, the Employee shall devote her full working time,
energy and attention to the performance of her duties and responsibilities
hereunder and shall faithfully and diligently endeavor to promote the business
and best interests of the Employer.
(c) During
the Employment Period, the Employee may not, without the prior written consent
of the Employer, operate, participate in the management, operations or control
of, or act as an employee, officer, consultant, agent or representative of, any
type of business or service (other than as an employee and director of the
Employer), provided that it shall not be a violation of the foregoing or of
Section 1(b) above for the Employee to (i) act or serve as a director, trustee
or committee member of any civic or charitable organization, (ii) manage her
personal, financial and legal affairs, or (iii) serve as a director of ON
Semiconductor Corporation, Atheros Communications, and Open Silicon
Inc., so long as such activities (described in clauses (i),
(ii), and (iii)) do not interfere with the performance of her duties
and responsibilities to the Employer as provided hereunder. Service
on any other entity’s board of directors must be approved by the
Board.
2. Compensation.
(a) As
compensation for the agreements made by the Employee herein and the performance
by the Employee of her obligations hereunder, during the Employment Period, the
Employer shall pay the Employee, pursuant to the Employer’s normal and customary
payroll procedures, a base salary (the “Base Salary”) at the
rate of $625,000.00 per annum. The Board shall review the Employee’s
Base Salary annually and may (but is not required to) increase the Base Salary
in its sole discretion.
(b) (i)
In addition to the Base Salary, during the Employment Period the Employee shall
have an opportunity, subject to the terms and conditions of the Employer’s
annual incentive plan for executive officers (the “Management Incentive Plan or
MIP”), to earn an annual bonus (the “Bonus”) with a target
amount of 150% of Base Salary (the “Target Bonus”) based
on the achievement of annual performance objectives which shall be established
and approved by the Board or any authorized committee thereof for the Employee
and the other members of the management team of the Employer. No less
than one-half of any bonus is paid in cash, with the balance paid as a
restricted stock award (“RSA”) vesting as
follows: 25% on each of the first and second anniversaries of the
date of the grant, and the remaining 50% on the third anniversary of the date of
the grant provided that the Employee continues to be employed by the Employer
through the applicable vesting date. The Employee will also be
eligible for an additional annual over-plan bonus amount, to be paid in cash,
consistent with the terms and conditions of the then current Management
Incentive Plan which for Employee shall not be less than an additional maximum
of 20% of Base Salary. Notwithstanding anything in the Management
Incentive Plan or this Agreement to the contrary, in no event shall such Bonus
(or any other amount payable pursuant to this Section 2(b)(i)) be paid later
than the fifteenth (15) day of the third month following the end of the fiscal
year with respect to which such Bonus (or such other amount) was earned, if at
all.
(ii) Notwithstanding
anything in Section 2(b)(i) to the contrary, Employee shall not be entitled to
receive a Bonus in respect of fiscal year 2009 pursuant to the Employer’s fiscal
year 2009 MIP. In lieu of such Bonus, the Employee shall receive a
bonus in an amount equal to $300,000 (the “FY 09
Bonus”). Half of the FY 09 Bonus ($150,000) will be paid to
the Employee in a cash lump sum on May 20, 2009 and the remaining half of the FY
09 Bonus ($150,000) will be paid in RSAs to the Employee on the same date the
full fiscal year 2009 RSAs are granted to participants in the MIP with the same
vesting schedule as set forth in Section 2(b)(i) above, (provided that if no
RSAs are granted to participants in the MIP, then the RSAs shall be granted to
the Employee on the third business day following the Employer’s release of its
full fiscal year 2009 earnings), subject, in each case, to the Employee
continuing to be employed by the Employer on the applicable payment
date.
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(c) On
or as soon as practicable after the Effective Date (as defined below), the
Employer shall grant the Employee options (the “Option”) to purchase
300,000 shares of common stock of the Employer at an exercise price equal to the
fair market value of a share of Employer common stock on the grant
date. The Option shall be subject to and governed by the terms and
conditions of the plan from which it is granted (the “Option Plan”) and
shall be evidenced by a stock option grant agreement as provided under the
Option Plan. 25% of the Option will vest on each of the first four anniversaries
of the grant date of such Option provided the Employee continues to remain
employed by the Employer on each such vesting date. In addition, the
Employer shall grant to the Employee 37,500 stock appreciation rights (“SARS”) on a quarterly
basis on the same schedule as such grants are made to the Directors of the
Employer pursuant to the terms and conditions of the plan from which such grants
are made. The first such SAR grant will be granted in April,
2009. In addition, Employer shall grant to the Employee 18,750
SARS in January, 2009 on the same schedule as such grants are made to the
Directors of the Employer pursuant to the terms and conditions of the plan from
which such grants are made. 33% of each such SAR grant will vest on
each of the first three anniversaries of the grant date of such SAR provided the
Employee continues to remain employed by the Employer on each of the applicable
vesting dates. Notwithstanding anything herein to the contrary, from
time to time the Board or the Compensation Committee, in its sole discretion,
may modify the grant, (which may include a partial or total substitution of an
alternative equity based instruments, such as without limitation, stock
options), provided the result is an equivalent equity based grant measured as of
the Effective Date.
(d)
With respect to the sale of Employee’s current personal residence in Pocatello,
Idaho, the Employee shall be eligible to sell such home through the Employer’s
relocation program with Paragon Relocation Resources and shall also receive the
following relocation benefits pursuant to the Employer’s standard relocation
policies for executives (collectively the “Relocation Program”
which is attached hereto as Exhibit A).
(e) On
the Effective Date, Employer shall grant to the Employee RSAs with an intrinsic
value, calculated as of the date of grant, of $250,000, 25% of which will vest
on the second anniversary of the date of the grant, 25% of which will vest on
the third anniversary of the date of the grant and 50% of which will vest on the
fourth anniversary of the date of the grant, provided, in each case, that the
Employee remains employed by the Employer through the applicable vesting
date.
(f)
On or as soon as practicable
after the Employee closes on the purchase of a primary residence in the
Hauppauge, New York area, (but in no event more than thirty (30) days after
closing), the Employer shall pay to the Employee a lump-sum cash
payment in an amount equal to the difference between $2,100,000 and
(1) the amount paid to the Employee by Paragon Relocation Resources (“Paragon”)
for Employee’s current residence in Pocatello, Idaho pursuant to its standard
policies with Employer or (2) some higher amount that Employee realizes in a
direct sale of the property without using Paragon, which will later be grossed
up for applicable taxes (the “Gross-Up”), to the
Employee (collectively the “Cash
Payment”). In the event the Employee voluntarily resigns from
her employment with the Employer prior to the second anniversary of the
Effective Date, then the Employee shall be obligated to repay no later than 30
days from the Date of Termination to the Employer an amount equal to
the product of (i) the Cash Payment and (ii) a fraction, the numerator of which
is 730 minus the number of days in the period commencing on the Effective Date
and ending on the date of the Employee’s resignation and the denominator of
which is 730. Notwithstanding the foregoing, the Gross-Up shall be
paid to the Employee on May 20, 2009. Notwithstanding anything herein
to the contrary, under no circumstances will the Cash Payment be paid to the
Employee before the Effective Date.
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(g) During
the Employment Period: (i) the Employee shall be entitled to participate in the
following benefits on the terms and conditions generally in effect for such
plans, practices, policies and programs from time to time for all
employees: SMSC Flex Benefit Plan, including medical, dental and
vision coverage; health care and dependent care reimbursement accounts; basic
life/AD&D insurance; long term disability insurance, executive long term
disability insurance, executive health benefit and 401(k) savings and retirement
plan.
(h) During
the Employment Period, the Employee shall be entitled to take paid vacation of
six weeks per year; Employee shall comply with all other aspects of the
Employer’s vacation policy as may be in effect from time to time.
(i) The
Employer shall promptly reimburse the Employee for all reasonable business
expenses incurred by the Employee in connection with the performance of her
duties and responsibilities hereunder upon the presentation of statements of
such expenses in accordance with the Employer’s policies and procedures now in
force or as such policies and procedures may be modified from time to time;
provided that in no event shall such reimbursement be made later than the date
that is two and one-half months following the end of the taxable year following
the taxable year in which such expenses were incurred.
(j) In
addition to the indemnification of the Employee as provided for under the
Employer’s certificates of incorporation and by-laws, the Employer shall
provide, at its expense, the Employee with coverage under its directors’ and
officers’ liability insurance policy at the same level provided the other
directors and officers of the Employer, and the standard form indemnity
agreement annexed hereto as Exhibit B.
(k) For
purposes of clarification, nothing herein shall hinder or interfere with the
right of the Employer to amend, modify or terminate any plan, practice, policy
and program as it deems appropriate, from time to time, in its sole
discretion.
3. Employment
Period.
The
Employment Period shall commence on October 20, 2008 (the “Effective Date”) and
shall continue for an initial term of four (4)
years. Thereafter, the Employment Period shall automatically
renew for one (1) year terms unless the Employer provides a Notice of
Non-Renewal of the Agreement at least one hundred eighty (180) days prior to the
expiration of the Employment Period. Notwithstanding the foregoing,
the Employee’s employment hereunder may be terminated during the Employment
Period upon the earliest to occur of the following events (at which time the
Employment Period shall be terminated in accordance with Section
4).
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(a) Death. The
Employee’s employment hereunder shall terminate upon her death.
(b) Disability. The
Employer shall be entitled to terminate the Employee’s employment hereunder for
“Disability” as
a result of (i) the inability of the Employee to engage in any substantial
gainful activity or (ii) the receipt by the Employee of income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Employer, in each case by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, as determined by the Employer.
(c) Cause. The
Employer may terminate the Employee’s employment hereunder for
Cause. For purposes of this Agreement, the term “Cause” shall mean the
Employee’s (A) gross negligence or willful misconduct in the performance of the
Employee’s duties for the Employer (other than due to the Employee’s physical or
mental incapacity), (B) breach or violation, in any material respect, of any
written agreement between the Employee and the Employer or any material policy
of the Employer, as may be in effect from time to time (including, without
limitation, the Employer’s code of conduct or similar employee conduct policy),
(C) commission of a non-de minimis act of dishonesty or breach of trust with
regard to the Employer, any of its subsidiaries or affiliates, or (D) commission
of a felony or other crime of moral turpitude.
(d) Without
Cause; for Good Reason; and Non-Renewal by Employer. The Employer may terminate
the Employee’s employment hereunder during the Employment Period without Cause,
and the Employee may terminate her employment hereunder during the Employment
Period for Good Reason. In addition, the Employer may terminate the
Employee’s employment pursuant to a Notice of Non-Renewal given by the Employer.
For purposes of this Agreement, the term “Good Reason” shall
mean the occurrence of any of the following events, without the Employee’s prior
written consent: (i) any materially adverse change to the Employee’s then base
salary and bonus opportunity, responsibilities, duties, authority or status or
any material adverse change in the Employee’s then positions, titles or
reporting responsibilities; provided, that, the Employer ceasing to be or
becoming a publicly traded company shall not be deemed a material adverse
change; (ii) a relocation of the Employee’s principal business location to an
area outside a 50 mile radius of her principal business location as of the
Effective Date; or (iii) a material breach by the Employer of this Agreement;
provided, that, within sixty (60) days following the occurrence of any of the
events set forth therein, the Employee has delivered written notice to the
Employer of the Employee’s intention to terminate the Employee’s employment for
Good Reason, and the Employer shall not have cured such circumstances (if
susceptible to cure) within thirty (30) days following receipt of such notice
(or, in the event that such grounds cannot be corrected within such thirty (30)
day period, the Employer has not taken reasonable steps within such thirty (30)
day period to correct such grounds as promptly as practicable
thereafter).
5
(e) Voluntarily. The
Employee may voluntarily terminate her employment hereunder, provided that the
Employee provides the Employer with written notice of her intent to terminate
her employment at least one hundred eighty (180) days in advance of the Date of
Termination (as defined in Section 4 below).
4. Termination
Procedure.
(a)
Notice of Termination. Any termination of the Employee’s employment
by the Employer or by the Employee during the Employment Period (other than
termination pursuant to Section 3(a)) shall be communicated by written “Notice of
Termination” to the other party hereto in accordance with Section
8(a).
(b) Date
of Termination. “Date of Termination”
shall mean (i) if the Employee’s employment is terminated by her death, the date
of her death, (ii) if the Employee’s employment is terminated pursuant to
Section 3(b), thirty (30) days after Notice of Termination, (iii) if the
Employee voluntarily terminates her employment, the date specified in the notice
given pursuant to Section 3(e) herein which shall not be less than one hundred
eighty (180) days after the Notice of Termination (iv) if the Employee’s
employment is terminated in connection with the Employer’s delivery of a Notice
of Non-Renewal, the expiration of the then current Employment Period, and (v) if
the Employee’s employment is terminated for any other reason, the date on which
a Notice of Termination is given or any later date set forth in such Notice of
Termination.
(c) Board/Committee
Resignation. Upon termination of Employee’s employment with the
Employer for any reason, Employee agrees to resign, as of the Date of
Termination and to the extent applicable, all positions and titles with the
Employer, including as a member of the Board (and any committee thereof) and all
positions and titles, including service as a member of the Board of Directors
(and any committee thereof), of any of the Employer’s
affiliates.
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5. Termination
Payments.
(a)
Without Cause and for Good Reason. In the event of the termination of
the Employee’s employment during the Employment Period by the Employer without
Cause or by the Employee for Good Reason the Employer shall pay to the Employee
(i) within thirty (30) days following the Date of Termination, (A) Employee’s
accrued but unused vacation, (B) Employee’s Base Salary through the Date of
Termination (to the extent not theretofore paid), (C) any unreimbursed business
expenses properly incurred by Employee in accordance with Section 2(i) hereof
(provided that claims for such expenses are submitted to the Employer within
fifteen (15) days following the Date of Termination) (collectively, the “Accrued
Obligations”), (ii) a lump sum payable with thirty (30) days
following the Date of Termination equal to the sum of (A) a payment (the “Base Salary Termination
Payment”) equal to two times the Employee’s Base Salary as in effect
immediately prior to the Date of Termination and (B) two times the
Termination Payment (as defined below), (iii) all stock options,
stock appreciation rights or other equity awards held by the Employee and
outstanding as of the Date of Termination that would have vested within one (1)
year from the Date of Termination shall immediately vest on the Date of
Termination, and (iv) the Employer shall provide family group health insurance
equivalent to the coverage provided by Employer to Employee as of the
date of such termination, excluding group life and group disability
plans, for a period of 24 months from the date of termination. In the event such
Date of Termination occurs within the one-year period immediately following a
Change of Control (as defined below), (i) all stock options, stock appreciation
rights or other equity awards held by the Employee and outstanding as of the
Date of Termination shall immediately vest as of the Date of Termination, and
(ii) Employee shall receive a lump sum payment equal to two times 150% of the
Employee’s Base Salary as in effect on the date immediately preceding her Date
of Termination. Employee shall not be entitled to receive the
Termination Payment in addition to this lump sum amount. Notwithstanding the
foregoing, all of the foregoing payments and benefits (other than the Accrued
Obligations) are subject to and conditioned upon the Employee, within forty-five
(45) days of the Date of Termination (the “Release Period”),
executing a valid general release and waiver (in a form satisfactory to the
Employer), waiving all claims the Employee may have against the Employer, its
successors, assigns, affiliates, employees, officers and
directors. Any payment that otherwise would be made prior to
Executive’s delivery of such executed release shall be paid to the Executive on
the first business day following the conclusion of the Release
Period. Notwithstanding anything to the contrary in this Agreement,
Employee shall not be entitled to receive any bonus payment pursuant to any
bonus plan of the Company (including, without limitation, pursuant to Section
2(b) hereof) for any measuring period in which her employment with the Company
has terminated, or any subsequent period.
For
purposes of this Agreement, “Change of Control”
has the meaning ascribed to the phrase “Change in the Ownership or Effective
Control of a Corporation or in the Ownership of a Substantial Portion of the
Assets of a Corporation” under Treasury Department Final Regulation
1.409A-3(i)(5), or any successor thereto, and in the event that such regulations
are withdrawn or such phrase (or a substantially similar phrase) ceases to be
defined, as determined (reasonably and in good faith) by the Board.
For
purposes of this Agreement, “Termination Payment”
shall be defined as follows: (i) if the Date of Termination is on or
before February 28, 2010, then the Termination Payment shall be equal to 150% of
the Employee’s Base Salary for the fiscal year in which the Date of Termination
occurred, (ii) if the Date of Termination is after February 28, 2010
but on or before February 28, 2011, then the Termination Payment shall be equal
to the average of 150% of the Employee’s Base Salary for fiscal year
2011 and the actual bonus received by the Employee pursuant to the MIP for
fiscal year 2010, and (iii) if the Date of Termination is after February 28,
2011, then the Termination Payment shall be equal to the average of the last two
full fiscal year bonuses received by the Employee pursuant to the
MIP.
7
(b) For
Non-Renewal by the Employer. In the event of Employer sends a Notice
of Non-Renewal to the Employee the Employer shall pay to the Employee , within
fifteen (15) days following the Date of Termination (but in no event later than
the fifteenth day of the third month following the end of the fiscal year in
which such Notice of Non-Renewal was sent to the Employee), (i) the Accrued
Obligations, (ii) a lump-sum payment equal to the Employee’s Base Salary as in
effect immediately prior to the Date of Termination, (iii) the
Termination Payment, (iv) all stock options, stock appreciation
rights or other equity awards held by the Employee and outstanding as of the
Date of Termination that would have vested within one (1) year from the Date of
Termination shall immediately vest on the Date of Termination, and (v) the
Employer shall provide family group health insurance equivalent to the coverage
provided by Employer to Employee as of the date of such termination,
excluding group life and group disability plans, for a period of 12 months from
the date of termination. Notwithstanding the foregoing, all of the foregoing
payments and benefits (other than the Accrued Obligations) are subject to and
conditioned upon the Employee, within the Release Period, executing a valid
general release and waiver (in a form satisfactory to the Employer), waiving all
claims the Employee may have against the Employer, its successors, assigns,
affiliates, employees, officers and directors. Any
payment that otherwise would be made prior to Executive’s delivery of such
executed release shall be paid to the Executive on the first business day
following the conclusion of the Release Period. Notwithstanding
anything to the contrary in this Agreement, Employee shall not be entitled to
receive any bonus payment pursuant to any bonus plan of the Company (including,
without limitation, pursuant to Section 2(b) hereof) for any measuring period in
which her employment with the Company has terminated, or any subsequent
period.
(c) Disability
or Death. If the Employee’s employment is terminated during the
Employment Period as a result of the Employee’s death or Disability, the
Employer shall pay the Employee or the Employee’s estate, as the case may be,
(i) within thirty (30) days following the Date of Termination, the Accrued
Obligations, and (ii) a “Pro-Rata Bonus” equal
to the product of the Bonus that the Employee would have earned for such fiscal
year pursuant to Section 2(b) herein and a fraction, the numerator of which is
the number of calendar days beginning on the first day of the Employer’s fiscal
year in which the Date of Termination occurs and ending on and including the
Date of Termination and the denominator of which is 365, such Pro-Rata Bonus to
be paid on the date annual bonuses are otherwise paid to other executive
officers of the Employer (but in no event later than the date that is two and
one-half months following the end of the fiscal year in which the Date of
Termination occurs).
(d) Cause
or Voluntarily. If the Employee’s employment is terminated during the
Employment Period by the Employer for Cause or voluntarily by the Employee
without Good Reason, the Employer shall pay to the Employee, within thirty (30)
days following the Date of Termination, the Accrued
Obligations.
8
(e) (i) If
all or any portion of the amounts payable or benefits provided to Employee under
this Agreement or otherwise are “excess parachute payments” and, as a result,
are subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”, and such
excise tax, the “Excise Tax”), and if
the net after-tax amount (taking into account all applicable taxes payable by
the Employee, including without limitation the Excise Tax) that Employee would
receive with respect to such payments or benefits exceeds the net after-tax
amount Employee would receive if the amount of such payments and benefits were
reduced to the maximum amount which could otherwise be payable to Employee
without the imposition of the Excise Tax, then, only to the extent necessary to
eliminate the imposition of the Excise Tax, such payments and benefits shall be
reduced, in the order and of the type mutually agreed to by the Employee and the
Employer. The calculations required under this Section 5(e) shall be prepared by
the Employer and reviewed for accuracy by the Employee and the Employer’s
regular certified public accountants.
(ii) Notwithstanding
anything herein to the contrary, if at the time of Employee’s termination of
employment with the Employer, Employee is a “specified employee” as defined in
Section 409A of the Code and the deferral of the commencement of any payments or
benefits otherwise payable hereunder as a result of such termination of
employment is necessary in order to prevent any accelerated or additional tax
under Section 409A of the Code, then the payments to which Employee would
otherwise be entitled during the first six months following her termination of
employment shall be deferred and accumulated (without any reduction in such
payments or benefits ultimately paid or provided to Employee) for a period of
six months from the date of the Employee’s separation from service (as
determined under Section 409A of the Code) and paid in a lump sum on the first
day of the seventh month following such separation from service (or,
if earlier, the date of the Employee’s death).
(f)
Except as provided in this Section 5, the Employer shall have no additional
obligations to the Employee under this Agreement or otherwise and the Employee
shall not be entitled to any other severance or similar benefits under any other
plan, program, policy or agreement. Notwithstanding the foregoing,
the terms and conditions of any agreements relating to stock options, stock
appreciation rights or other equity awards held by the Employee on the Date of
Termination shall continue in full force and effect except as specifically set
forth herein or unless inconsistent with or prohibited by the applicable plan
document.
6. Restrictive
Covenants. The Employee acknowledges and recognizes the highly
competitive nature of the businesses of the Employer (which, for purposes of
this Section 6, shall include the Employer, all of Employer’s subsidiaries and
all affiliated companies and joint ventures connected by ownership to Employer
at any time) and accordingly agrees as follows:
9
(a) Non-competition
with Employer. During the Restricted Period, Employee shall not
become an employee, director, or independent contractor of, or consultant to, or
perform any services for, any Competitor of Employer. For purposes of
this Agreement, a “Competitor of
Employer” shall mean (i) any unit, division, line of business, parent,
subsidiary or subsidiary of the parent of any of the competitors listed in the
Employer’s Annual Report on Form 10-K filed immediately preceding termination;
or (ii) any individual or entity that within the one-year period immediately
following the Date of Termination could reasonably be expected to generate more
than $5 million in annualized gross revenue from any activity that competes, or
combination of activities that competes, with any business of
Employer. For purposes of this Agreement, Restricted Period shall
mean the period commencing on the Effective Date and ending on (i) in the event
the Employee’s employment is terminated without Cause or for Good Reason, the
twenty four month anniversary of the Date of Termination or (ii) in the event
the Employee’s employment is terminated for any other reason, the twelve month
anniversary of the Date of Termination.
(b)
Non-solicitation of Employer Customers. During the Restricted Period,
Employee shall not, directly or indirectly, on behalf of Employee or of anyone
other than Employer, solicit or attempt to solicit (or assist any third party in
soliciting or attempting to solicit) any of Employer’s then current and actively
sought potential customers (“Customers”) in
connection with any business activity that is operated by a Competitor of
Employer.
(c) Non-solicitation
of Employer Employees. During the Restricted Period, , Employee shall
not, without the prior written consent of the Board, directly or indirectly, on
behalf of Employee or any third party, solicit or hire or recruit or, other than
in the good faith performance of Employee’s duties hereunder, induce or
encourage (or assist any third party in hiring, soliciting, recruiting, inducing
or encouraging) any employees of Employer or any individuals who were employees
within the six-month period immediately prior thereto to terminate or otherwise
alter her employment with Employer. Notwithstanding the foregoing,
the restrictions contained in this Section 6(c) shall not apply to general
published solicitations that are not specifically directed to employees of the
Employer.
(d) Non-disclosure
of Confidential Information and Trade Secrets. During the Restricted Period and
thereafter, except in the good faith performance of Employee’s duties hereunder
or where required by law, statute, regulation or rule of any governmental body
or agency, or pursuant to a subpoena or court order, Employee shall not,
directly or indirectly, for Employee’s own account or for the account of any
other person, firm or entity, use or disclose any Confidential Information or
proprietary Trade Secrets of Employer (each as defined below) to any third
person.For purposes of this Agreement, “Confidential
Information” shall mean all information regarding Employer and any of its
affiliates, any Employer activity or the activity of any affiliate, Employer
business or the business of any affiliate or Employer Customer or the Customers
of any affiliate that is not generally known to persons not employed or retained
(as employees or as independent contractors or agents) by Employer, that is not
generally disclosed by Employer practice or authority to persons not employed by
Employer, that does not rise to the level of a Trade Secret and that is the
subject of reasonable efforts to keep it confidential. Confidential
Information shall, to the extent such information is not a Trade Secret,
include, but not be limited to product code, product concepts, production
techniques, technical information regarding Employer or affiliate products or
services, production processes and product/service development, operations
techniques, product/service formulas, information concerning Employer or
affiliate techniques for use and integration of its website and other
products/services, current and future development and expansion or contraction
plans of Employer or any affiliate, sale/acquisition plans and contacts,
marketing plans and contacts, information concerning the legal affairs of
Employer or any affiliate and certain information concerning the strategy,
tactics and financial affairs of Employer or any
affiliate. “Confidential Information” shall not include information
that (i) has become generally known or available to the public, other than
information that has become available as a result, directly or indirectly, of
the Employee’s failure to comply with any of her obligations to Employer or its
affiliates, or (ii) is already known by the Employee prior to the Effective Date
of this Agreement and not subject to a duty of confidentiality to Employer or
another party, or (iii) is hereafter rightfully furnished to the Employee by a
third party without a confidentiality obligation and without breach of this
Agreement. This definition shall not limit any definition of
“confidential information” or any equivalent term under the Uniform Trade
Secrets Act or any other state, local or federal law.
10
For purposes of this Agreement, “Trade Secret” shall
mean all secret, proprietary or confidential information regarding Employer
(which shall mean and include all of Employer’s subsidiaries and all affiliated
companies and joint ventures connected by ownership to Employer at any time) or
any Employer activity that fits within the definition of “trade secrets” under
the Uniform Trade Secrets Act or other applicable law. Without
limiting the foregoing or any definition of Trade Secrets, Trade Secrets
protected hereunder shall include all source codes and object codes for
Employer’s software and all website design information to the extent that such
information fits within the Uniform Trade Secrets Act. Nothing in
this agreement is intended, or shall be construed, to limit the protections of
any applicable law protecting trade secrets or other confidential
information. “Trade Secrets” shall not include information that (i)
has become generally known or available to the public, other than information
that has become available as a result, directly or indirectly, of the Employee’s
failure to comply with any of Employee’s obligations to Employer or its
affiliates, or (ii) is already known by the Employee prior to the Effective Date
of this Agreement and not subject to a duty of confidentiality to Employer or
another party, or (iii) is hereafter rightfully furnished to the Employee by a
third party without a confidentiality obligation and without breach of this
Agreement. This definition shall not limit any definition of “trade
secrets” or any equivalent term under the Uniform Trade Secrets Act or any other
state, local or federal law.
(e) Intellectual
Property. Employee agrees that all right, title and interest to all
works of whatever nature generated in the course of her employment with the
Employer or its affiliates resides with Employer and its affiliates, and that
Employee will do all acts and execute all documents necessary to vest such
right, title and interest with the Employer. Employee agrees that in
connection with any termination of Employee’s employment with the Employer she
will return to Employer, not later than the Date of Termination, all property,
in whatever form (including computer files and other electronic data), of
Employer or its affiliates in her possession, including without limitation, all
copies (in whatever form) of all files or other information pertaining to
Employer, its officers, directors, shareholders, customers or affiliates, and
any business or business opportunity of Employer and its
affiliates.
11
(f) No
Disparagement. During the Employment Period and the Restricted
Period, the Employee shall not make any statements, encourage others to make
statements or release information to disparage or defame Employer, any of its
affiliates or any of their respective directors or
officers. Notwithstanding the foregoing, nothing in this Section 6(f)
shall prohibit the Employee from making truthful statements when required by
order of a court or other body having jurisdiction or as required by
law.
(g) Employer
Property. In connection with any termination of Employee’s employment
with the Employer, the Employee hereby agrees to return to Employer and to cease
using any property of Employer, including without limitation, security key
cards, corporate credit cards, telephone calling cards or home office equipment
provided by Employer and to return such property no later than the Date of
Termination.
(h) Enforceability
of Covenants. Employee acknowledges that Employer has a present and
future expectation of business from and with the Customers. Employee
acknowledges the reasonableness of the term, geographical territory, and scope
of the covenants set forth in this Section 6, and Employee agrees that Employee
will not, in any action, suit or other proceeding, deny the reasonableness of,
or assert the unreasonableness of, the premises, consideration or scope of the
covenants set forth herein and Employee hereby waives any such
defense. Employee further acknowledges that complying with the
provisions contained in this Agreement will not preclude Employee from engaging
in a lawful profession, trade or business, or from becoming gainfully
employed. Employee agrees that Employee’s covenants under this
Section 6 are separate and distinct obligations under this Agreement, and the
failure or alleged failure of Employer or the Board to perform obligations under
any other provisions of this Agreement shall not constitute a defense to the
enforceability of Employee’s covenants and obligations under this Section
6. Employee agrees that any breach of any covenant under this Section
6 will result in irreparable damage and injury to Employer and that Employer
will be entitled to injunctive relief in any court of competent jurisdiction
without the necessity of posting any bond.
7. Representations.
(a) The
parties hereto hereby represent that they each have the authority to enter into
this Agreement, and the Employee hereby represents to the Employer that the
execution of, and performance of duties under, this Agreement shall not
constitute a breach of or otherwise violate any other agreement to which the
Employee is a party.
(b) The
Employee hereby represents to the Employer that she will not utilize or disclose
any confidential information obtained by the Employee in connection with her
former employment with respect to her duties and responsibilities
hereunder.
(c)
The Employee is not a party to any litigation.
8. Miscellaneous.
(a) Any
notice or other communication required or permitted under this Agreement shall
be effective only if it is in writing and delivered personally or sent by
registered or certified mail, postage prepaid, addressed as follows (or if it is
sent through any other method agreed upon by the parties).
12
If to the Employer,
to:
SMSC
80 Arkay
Drive
Hauppauge,
NY 11788
|
Attention:
|
Walter
Siegel, Esq.
|
Vice
President and General Counsel
Copy: Chairman
of the Compensation Committee of the Employer
If to the
Employee, to the address on record with Employer; or, for either party, to such
other address as any party hereto may designate by notice to the others, and
shall be deemed to have been given upon receipt.
(b) This
Agreement shall constitute the entire agreement among the parties hereto with
respect to the Employee’s employment hereunder, and supersedes and is in full
substitution for any and all prior understandings or agreements with respect to
the Employee’s employment.
(c) This
Agreement may be amended only by an instrument in writing signed by the parties
hereto, and any provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement of such waiver
is sought. The failure of any party hereto at any time to require the
performance by any other party hereto of any provision hereof shall in no way
affect the full right to require such performance at any time thereafter, nor
shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) The
parties hereto acknowledge and agree that each party has reviewed and negotiated
the terms and provisions of this Agreement and has had the opportunity to
contribute to its revision. Accordingly, the rule of construction to
the effect that ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement. Rather, the terms
of this Agreement shall be construed fairly as to both parties hereto and not in
favor or against either party.
(e) Employee
shall provide Employee’s reasonable cooperation in connection with any action or
proceeding (or any appeal from any action or proceeding) which relates to events
occurring during Employee’s employment hereunder. In such an event,
Employer shall reimburse Employee for all reasonable expenses incurred at
Employer’s request; provided that in no event shall such reimbursement be made
later than the date that is two and one-half months following the end of the
taxable year following the taxable year in which such expenses were
incurred. This provision shall survive any termination of this
Agreement, without implication of the survival of any other provision of this
Agreement.
13
(f)
(i) This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, permitted assigns, heirs,
executors, administrators and other legal representatives. Neither
this Agreement nor any right or obligation hereunder may be assigned by the
Employee.
(ii)
The Employer shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer to assume this Agreement in the same
manner and to the same extent that the Employer would have been required to
perform it if no such succession had taken place. As used in the
Agreement, “the Employer” shall mean both the Employer as defined above and any
such successor that assumes this Agreement, by operation of law or
otherwise.
(g) Any
provision of this Agreement (or portion thereof) which is deemed invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and
subject to this Section, be ineffective to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the remaining
provisions thereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and
enforceable. No waiver of any provision or violation of this
Agreement by Employer shall be implied by Employer’s forbearance or failure to
take action.
(h) The
Employer may withhold from any amounts payable to the Employee hereunder all
federal, state, city or other taxes that the Employer may reasonably determine
are required to be withheld pursuant to any applicable law or regulation (it
being understood that the Employee shall be responsible for payment of all taxes
in respect of the payments and benefits provided herein).
(i) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New
York, without reference
to its principles of conflicts of law.
14
(j) Any
disagreement, dispute, controversy or claim arising out of or relating to this
Agreement or the interpretation hereof or any agreements relating hereto or
contemplated herein or the interpretation, breach, termination, validity or
invalidity hereof shall be settled exclusively and finally by arbitration;
provided that the Employer shall not be required to submit claims for injunctive
relief to enforce the covenants contained in Sections 6 of this Agreement to
arbitration. The arbitration shall be conducted in accordance with
the Commercial Arbitration Rules (the “Rules”) of the
American Arbitration Association (the “AAA”), except as amplified or otherwise
varied hereby. The Employer and the Employee jointly shall appoint
one individual to act as arbitrator within thirty (30) days of initiation of the
arbitration. If the parties shall fail to appoint such arbitrator as
provided above, such arbitrator shall be appointed by the President of the New
York Bar Association and shall be a person who maintains her principal place of
business in the New York metropolitan area and shall be an attorney, accountant
or other professional licensed to practice by the State of New York who has
substantial experience in employment and executive compensation
matters. All fees and expenses of such arbitrator shall be shared
equally by the Employer and the Employee. The situs of the
arbitration shall be New York City. Any decision or award of the
arbitral tribunal shall be final and binding upon the parties to the arbitration
proceeding. The parties hereto hereby waive to the extent permitted
by law any rights to appeal or to seek review of such award by any court or
tribunal. The arbitration award shall be paid within thirty (30) days
after the award has been made. Judgment upon the award may be entered
in any federal or state court having jurisdiction over the parties and shall be
final and binding. Each party shall be required to keep all
proceedings related to any such arbitration and the final award and judgment
strictly confidential; provided that either party may disclose such award as
necessary to enter the award in a court of competent jurisdiction or to enforce
the award, and to the extent required by law, court order, regulation or similar
order
(k) This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same
instrument.
(l) The
headings in this Agreement are inserted for convenience of reference only and
shall not be a part of or control or affect the meaning of any provision
hereof.
(m) If
any provision of this Agreement (or any award of compensation or benefits
provided under this Agreement) would cause Employee to incur any additional tax
or interest under Section 409A of the Code, the Employer shall use reasonable
efforts to reform such provision to comply with 409A and agrees to maintain, to
the maximum extent practicable without violating 409A of the Code, the original
intent and economic benefit to Employee of the applicable provision; provided
that nothing herein shall require the Employer to provide the Employee with any
gross-up for any tax, interest or penalty incurred by Employee under Section
409A of the Code.
15
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
|
Standard
Microsystems Corporation.
|
|
|
By:
Timothy P. Craig
|
|
|
Title:
Chairman of the Compensation Committee of the Board of
Directors
|
|
|
Christine
King
|
|
16
Exhibit
A
SMSC
Executive Relocation Program Summary
For
Christine King
Relocation
Administration:
All
benefits will be administered through Paragon Relocation
Resources. Your Paragon contact will be:
|
Michelle
Falcinelli, Sr. Director Global Relocation Services
|
Work:
(203) 546-1010
|
|
7
Kenosia Avenue, Suite B
|
Cell:
(203) 733-5602
|
|
Danbury,
CT 06810
|
Fax:
(203) 546-1115
|
|
Terri
Hamilton, Client Relations Consultant
|
Work:
(203) 546-1037
|
Paragon
oversees and centrally coordinates all of the activities of your move including
expense reimbursement and selection of preferred vendors such as real estate
professionals and household goods movers.
Marketing/Homesale
Assistance:
Paragon
will coordinate gathering 2 Broker Market Analyses to assist you with
establishing the initial list price of your home. The home should be
listed within 5% of the average of the 2 recommended listing
prices. The listing agreement must include the Broker Exclusion
Clause to insure a tax safe homesale transaction. Please don’t
contact any realtors prior to speaking with Paragon.
Paragon
will provide a Guaranteed Buy-Out Offer at 100% of the average of 2 ERC
relocation appraisals. You will have up to 60 days to accept the
Guaranteed Buy-Out Offer and an additional 30 days to vacate the property after
accepting the offer.
If a
bona-fide offer is received from an outside buyer during the time you are
marketing the home and prior to acceptance of the Guaranteed Buy-Out Offer,
Paragon will amend the value of the Guaranteed Buy-Out Offer to reflect the
higher sales price after approving the terms of the sale.
The
Guaranteed Buy-Out is contingent upon verification of clear title and
inspections of the property. Paragon Relocation Resources will
acquire your home in Idaho approximately 1 week before the closing date on your
new home to allow time for processing and releasing your equity if
needed. You will not incur any closing expenses as a result of this
transaction.
Temporary
Living
Temporary
living will be provided for a maximum of 6 months including lodging and return
trips home every 2 weeks. It is recommended that you pre-ship 1
vehicle during the first 30 days of employment. A rental car will be provided
for the first 30 days. Total temporary living expenses will be capped
at $60,000.00. This includes lodging, meals and return trips home
when necessary.
Household
Goods
Paragon
will select a moving company to assist you with the movement of your household
goods including:
|
|
·
|
Shipment
of primary residence household goods including grand piano, pool table and
2 gun safes.
|
|
|
·
|
Packing,
loading, unloading and partial
packing.
|
|
|
·
|
Storage
up to 6 months (but not to exceed actual period of temporary living) and
delivery out of storage.
|
|
|
·
|
In
addition, the shipment of the following items are authorized
:
|
|
|
1.
|
2
cars
|
|
|
2.
|
2
motorcycles
|
|
|
3.
|
2001
Formula 38’ boat with trailer
|
|
|
4.
|
Kubota
ATV
|
|
|
5.
|
23hp
lawn tractor with attachments
|
Final
Move
Reasonable
transportation, lodging, and meals will be reimbursed by Paragon Relocation
Resources. In no event shall any of the foregoing reimbursements be
made later than the date this is two and one-half months following the end of
the taxable year following the taxable year in which such expenses were
incurred.
Exhibit
B
INDEMNITY
AGREEMENT
This
Indemnity Agreement ("Agreement") is made as of November 21, 2005 by and between
Standard Microsystems Corporation, a Delaware corporation (the "Company"), and
___________________ ("Indemnitee").
RECITALS
WHEREAS,
highly competent persons have become more reluctant to serve publicly-held
corporations as directors or officers or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation and as a result of the
added liabilities imposed by the Sarbanes Oxley Act;
WHEREAS,
the Board of Directors of the Company (the "Board") has determined that, in
order to attract and retain qualified individuals, the Company will attempt to
maintain on an ongoing basis, at its sole expense, liability insurance to
protect persons serving the Company and its subsidiaries from certain
liabilities. Although the furnishing of such insurance has been a customary and
widespread practice among United States-based corporations and other business
enterprises, the Company believes that, given current market conditions and
trends, such insurance may be available to it in the future only at higher
premiums and with more exclusions. At the same time, directors, officers and
other persons in service to corporations or business enterprises are being
increasingly subjected to expensive and time-consuming litigation relating to,
among other things, matters that traditionally would have been brought only
against the Company or business enterprise itself. The By-Laws of the Company
(the "By-Laws") require indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification pursuant to
applicable provisions of the Delaware General Corporation Law ("DGCL"). The
By-Laws and the DGCL expressly provide that the indemnification provisions set
forth therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors, officers
and other persons with respect to indemnification;
WHEREAS,
the uncertainties relating to such insurance
and to indemnification have increased the difficulty of attracting and
retaining such persons;
WHEREAS,
the Board has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the Company's
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;
WHEREAS,
it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they
will not be so indemnified;
WHEREAS,
this Agreement is a supplement to and in furtherance of the By-Laws of the
Company and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder; and
WHEREAS,
Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that he be so
indemnified;
NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:
1.
SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve as an
officer, or director or key employee of the Company for so long as Indemnitee is
duly elected or appointed or until Indemnitee tenders his or her resignation or
is terminated by the Company.
2.
DEFINITIONS. As used in this Agreement:
(a)
References to "agent" shall mean any person who is or was a director, officer,
or employee of the Company or a Subsidiary of the Company or other person
authorized by the Company to act for the Company serving in such capacity as a
director, officer, employee, fiduciary or other official of another corporation,
partnership, limited liability company, joint venture, trust or other enterprise
at the request of, for the convenience of, or to represent the interests of the
Company or a Subsidiary of the Company.
(b)
The terms "Beneficial Owner" and "Beneficial Ownership" shall have the meanings
set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as
in effect on the date hereof.
(c)
A "Change in Control" shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following events:
(i)
Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally in the election
of directors, unless (1) the change in the relative Beneficial Ownership of the
Company's securities by any Person results solely from a reduction in the
aggregate number of outstanding shares of securities entitled to vote generally
in the election of directors, or (2) such acquisition was approved in advance by
the Continuing Directors (as defined below) and such acquisition would not
constitute a Change in Control under part (iii) of this definition;
(ii)
Change in Board of Directors. Individuals who, as of the date hereof, constitute
the Board, and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who were directors on the date
hereof or whose election for nomination for election was previously so approved
(collectively, the "Continuing Directors"), cease for any reason to constitute
at least a majority of the members of the Board;
(iii)
Corporate Transactions. The effective date
of a reorganization, merger or consolidation of the
Company (a "Business Combination"), in each case, unless, following
such Business Combination: (1) all or substantially all of the individuals and
entities who were the Beneficial Owners of securities entitled to vote generally
in the election of directors immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 51% of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more Subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the securities entitled to vote generally in the
election of directors; (2) no Person (excluding any corporation resulting from
such Business Combination) is the Beneficial Owner, directly or indirectly, of
15% or more of the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of such corporation
except to the extent that such ownership existed prior to the Business
Combination; and (3) at least a majority of the Board of Directors of the
corporation resulting from such Business Combination were Continuing Directors
at the time of the execution of the initial agreement, or of the action of the
Board of Directors, providing for such Business Combination;
(iv)
Liquidation. The approval by the stockholders of the Company of a complete
liquidation of the Company or an agreement or series of agreements for the sale
or disposition by the Company of all or substantially all of the Company's
assets, other than factoring the Company's current receivables or escrows due
(or, if such approval is not required, the decision by the Board to proceed with
such a liquidation, sale, or disposition in one transaction or a series of
related transactions); or
(v) Other
Events. There occurs any other event of a nature that would be required to be
reported in response to Item 6(e) of Schedule l4A of Regulation 14A (or a
response to any similar item on any similar schedule or form) promulgated under
the Exchange Act (as defined below), whether or not the Company is then subject
to such reporting requirement.
(d)
"Corporate Status" describes the status of a person who is or was a director,
officer, trustee, general partner, managing member, fiduciary, employee or agent
of the Company or of any other Enterprise (as defined below) which such person
is or was serving in such capacity at the request of the Company.
(e)
"Delaware Court" shall mean the Court of Chancery of the State of
Delaware.
(f)
"Disinterested Director" shall mean a director of the Company who is not
and was not a party to the Proceeding (as defined below) in respect of which
indemnification is sought by Indemnitee.
(g)
"Enterprise" shall mean the Company and any other corporation, constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger to which the Company (or any of its wholly owned
subsidiaries) is a party, limited liability company, partnership, joint venture,
trust, employee benefit plan or other enterprise of which Indemnitee is or was
serving at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent.
(h)
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i)
"Expenses" shall include reasonable attorneys' fees and costs, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses in connection
with prosecuting, defending, preparing to prosecute or defend, investigating,
being or preparing to be a witness in, or otherwise participating in, a
Proceeding (as defined below) . Expenses also shall include Expenses incurred in
connection with any appeal resulting from any Proceeding (as defined below),
including without limitation the premium, security for, and other costs relating
to any cost bond, supersedeas bond, or other appeal bond or its equivalent.
Expenses, however, shall not include amounts paid in settlement by Indemnitee or
the amount of judgments or fines against Indemnitee.
(j)
"Independent Counsel" shall mean a law firm or a member of a law firm that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company or Indemnitee
in any matter material to either such party (other than with respect to matters
concerning the Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements); or (ii) any other party to the Proceeding
(as defined below) giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "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.
(k)
References to "fines" shall include any excise tax assessed on Indemnitee with
respect to any employee benefit plan; references to "serving at the request of
the Company" shall include any service as a director, officer, employee, agent
or fiduciary of the Company which imposes duties on, or involves services by,
such director, officer, employee, agent or fiduciary with respect to an employee
benefit plan, its participants or beneficiaries; and if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in the best interests
of the participants and beneficiaries of an employee benefit plan, Indemnitee
shall be deemed to have acted in a manner "not opposed to the best interests of
the Company" as referred to in this Agreement.
(l)
The term "Person" shall have the meaning as set forth in Sections 13(d)
and 14(d) of the Exchange Act as in effect on the date hereof; provided,
however, that "Person" shall exclude: (i) the Company; (ii) any Subsidiaries (as
defined below) of the Company; (iii) any employment benefit plan of the Company
or of a Subsidiary (as defined below) of the Company or of any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company;
and (iv) any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of a Subsidiary (as defined below) of the Company
or of 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.
(m) A
"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 or the Company
publicly announces an intention to take or consider taking actions which if
consummated would constitute a Change in Control; (iii) any Person who becomes
the Beneficial Owner, directly or indirectly, of securities of the Company
representing five percent (5%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally in the election
of directors increases such Person's Beneficial Ownership of such securities by
five percent (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.
(n)
The term "Proceeding" shall include any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative or investigative nature, in which Indemnitee
was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer or key employee of the Company, by
reason of any action (or failure to act) taken by him or of any action (or
failure to act) on his part while acting as a director or officer of the
Company, or by reason of the fact that he is or was serving at the request of
the Company as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of any other Enterprise, in each case whether or
not serving in such capacity at the time any liability or expense is incurred
for which indemnification, reimbursement, or advancement of expenses can be
provided under this Agreement.
(o)
The term "Subsidiary," with respect to any Person, shall mean any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
that Person.
3.
INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify and hold
harmless Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee was, is, or is threatened to be made, a party to or a participant (as
a witness or otherwise) in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 3 Indemnitee shall be indemnified against all Expenses, judgments,
liabilities, fines, penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be unreasonably
withheld) (including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines, penalties
and amounts paid in settlement) actually and reasonably incurred by or on behalf
of Indemnitee in connection with such Proceeding or any claim, issue or matter
therein, if Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and, in
the case of a criminal Proceeding, had no reasonable cause to believe that his
conduct was unlawful.
4.
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify and hold harmless Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a
participant (as a witness or otherwise) in any Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section 4,
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by or on behalf of Indemnitee in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company. No indemnification for Expenses shall be made under this Section 4
in respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and only to the
extent that any court in which the Proceeding was brought or the Delaware Court
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 indemnification.
5.
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.
Notwithstanding any other provisions of this Agreement, to the extent that
Indemnitee is a party to (or a participant in) and is successful, on the merits
or otherwise, in any Proceeding or in defense of any claim, issue or matter
therein, in whole or in part, the Company shall indemnify and hold harmless
Indemnitee against all Expenses actually and reasonably incurred by him in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
and hold harmless Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
6.
INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified and held harmless against all Expenses actually
and reasonably incurred by or on behalf of Indemnitee in connection
therewith.
7.
ADDITIONAL INDEMNIFICATION. Notwithstanding any limitation in Sections 3, 4, or
5, the Company shall indemnify and hold harmless, to the extent permitted by
law, against 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 and amounts paid in settlement) actually and reasonably incurred by
Indemnitee if, by reason of Indemnitee's Corporate Status, Indemnitee is a party
to or threatened to be made a party to any Proceeding (including a Proceeding by
or in the right of the Company to procure a judgment in its favor). The only
limitation that shall exist upon the Company's obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make any payment
to Indemnitee that is finally determined (under the procedures, and subject to
the presumptions, set forth in Sections 12, 13 and 14) to be
unlawful.
8.
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
(a)
To the fullest extent permissible under applicable law, if the indemnification
and hold harmless rights provided for in this Agreement are unavailable to
Indemnitee in any Proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such Proceeding), the Company, in lieu of
indemnifying and holding harmless Indemnitee, shall pay, in the first instance,
the entire amount incurred by Indemnitee, whether for judgments, liabilities,
fines, penalties, amounts paid or to be paid in settlement and/or for Expenses,
in connection with any Proceeding without requiring Indemnitee to contribute to
such payment, and the Company hereby waives and relinquishes any right of
contribution it may have at any time against Indemnitee.
(b)
The Company shall not enter into any settlement of any Proceeding in which
the Company is jointly liable with Indemnitee (or would be if joined in such
Proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee.
(c)
The Company hereby agrees fully to indemnify and hold harmless Indemnitee
from any claims for contribution which may be brought by officers, directors or
employees of the Company other than Indemnitee who may be jointly liable with
Indemnitee.
9.
EXCLUSIONS. Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection
with any claim made against Indemnitee:
(a)
for which payment has actually been received by or on behalf of Indemnitee
under any insurance policy or other indemnity provision, except with respect to
any excess beyond the amount actually received under any insurance policy,
contract, agreement, other indemnity provision or otherwise;
(b)
for an accounting of profits made from the purchase and sale (or sale and
purchase) by Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Exchange Act or similar provisions of state statutory law
or common law; or
(c)
except as otherwise provided in Sections l4(e) - (f) hereof, in connection
with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee
against the Company or its directors, officers, employees or other indemnitees,
unless (i) the Board authorized the Proceeding (or any part of any Proceeding)
prior to its initiation or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.
10.
ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a)
Notwithstanding any provision of this Agreement to the contrary, and to
the fullest extent permitted by applicable law, the Company shall advance the
Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be
incurred by Indemnitee within three months) in connection with any Proceeding
within ten (10) days after the receipt by the Company of a statement or
statements requesting such advances from time to time, whether prior to or after
final disposition of any Proceeding. Advances shall be unsecured and interest
free. Advances shall be made without regard to Indemnitee's ability to repay the
Expenses and without regard to Indemnitee's ultimate
entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing a Proceeding to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the
advances claimed. The Indemnitee shall qualify for advances, to the fullest
extent permitted by applicable law, solely upon the execution and delivery to
the Company of an undertaking providing that the Indemnitee undertakes to repay
the advance to the extent that it is ultimately determined that Indemnitee is
not entitled to be indemnified by the Company under the provisions of this
Agreement, the By-Laws, applicable law or otherwise. This Section 10(a) shall
not apply to any claim made by Indemnitee for which indemnity is excluded
pursuant to Section 9.
(b)
The Company will be entitled to participate in the Proceeding at its own
expense.
(c)
The Company shall not settle any action, claim or Proceeding (in whole or in
part) which would impose any Expense, judgment, fine, penalty or limitation on
the Indemnitee without the Indemnitee's prior written consent, which consent
shall not be unreasonably withheld.
11.
PROCEDURE FOR NOTIFICATION AND APPLICATION FOR
INDEMNIFICATION.
(a)
Indemnitee agrees to notify promptly the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder. The failure of
Indemnitee to so notify the Company shall not relieve the Company of any
obligation which it may have to the Indemnitee under this Agreement, or
otherwise.
(b)
Indemnitee may deliver to the Company a written application to indemnify and
hold harmless Indemnitee in accordance with this Agreement. Such application(s)
may be delivered from time to time and at such time(s) as Indemnitee deems
appropriate in his or her sole discretion. Following such a written application
for indemnification by Indemnitee, the Indemnitee's entitlement to
indemnification shall be determined according to Section 12(a) of this
Agreement.
12.
PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a)
A determination, if required by applicable law, with respect to Indemnitee's
entitlement to indemnification shall be made in the specific case by one of the
following methods, which shall be at the election of
Indemnitee:
(i) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board or (ii) by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee. The Company promptly will advise
Indemnitee in writing with respect to any determination that Indemnitee is or is
not entitled to indemnification, including a description of any reason or basis
for which indemnification has been denied. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall reasonably
cooperate with the person, persons or entity making such
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any costs or Expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(b) In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel
shall be selected as provided in this Section 12(b). The Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board), and Indemnitee shall give written notice to the
Company advising it of the identity of the Independent Counsel so selected and
certifying that the Independent Counsel so selected meets the requirements of
"Independent Counsel" as defined in Section 2 of this Agreement. If the
Independent Counsel is selected by the Board, the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected and certifying that the Independent Counsel so selected meets the
requirements of "Independent Counsel" as defined in Section 2 of this Agreement.
In either event, Indemnitee or the Company, as the case may be, may, within ten
(10) days after such written notice of selection shall have been received,
deliver to the Company or to Indemnitee, as the case may be, a written objection
to such selection; provided, however, that such objection may be asserted only
on the ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 2 of this Agreement,
and the objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court of competent
jurisdiction has determined that such objection is without merit. If, within
twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 11(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Delaware Court for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Delaware Court, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under
Section 12(a) hereof. Upon the delivery of its opinion pursuant to Section 12(a)
or, if earlier, the due commencement of any judicial proceeding or arbitration
pursuant to Section 14(a) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then
prevailing).
(c) The
Company agrees to pay the reasonable fees and expenses of Independent Counsel
and to fully indemnify and hold harmless such Independent Counsel against any
and all Expenses, claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
13.
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) In
making a determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 11(b) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.
Neither the failure of the Company (including by its directors or Independent
Counsel) to have made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent Counsel)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
(b) If
the person, persons or entity empowered or selected under Section 12 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection
with the request for indemnification, or (ii) a final judicial determination
that any or all such indemnification is expressly prohibited under applicable
law; provided, however, that such 30-day period may be extended for a reasonable
time, not to exceed an additional fifteen (15) days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto.
(c) The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to indemnification
or 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 Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that his conduct was
unlawful.
(d) For
purposes of any determination of good faith, Indemnitee shall be deemed to have
acted in good faith if Indemnitee's action is based on the records or books of
account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected by the Enterprise.
The provisions of this Section 13(d) shall not be deemed to be exclusive or to
limit in any way the other circumstances in which the Indemnitee may be deemed
or found to have met the applicable standard of conduct set forth in this
Agreement.
(e) The
knowledge and/or actions, or failure to act, of any other director, officer,
trustee, partner, managing member, fiduciary, agent or employee of the
Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
14.
REMEDIES OF INDEMNITEE.
(a) In
the event that (i) a determination is made pursuant to Section 12 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses, to the fullest extent permitted by
applicable law, is not timely made pursuant to Section 10 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 12(a) of this Agreement within thirty (30) days after
receipt by the Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of
Section 12(a) of this Agreement within ten (10) days after receipt by the
Company of a written request therefor, (v) a contribution payment is not made in
a timely manner pursuant to Section 8 of this Agreement, or (vi) payment of
indemnification pursuant to Section 3 or 4 of this Agreement is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by the Delaware
Court to such indemnification, contribution or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Except as set forth herein, the provisions
of Delaware law (without regard to its conflict of laws rules) shall apply to
any such arbitration. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
(b) In
the event that a determination shall have been made pursuant to Section
12(a) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 14 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 14, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement and the Company shall have the burden of
proving Indemnitee is not entitled to indemnification or advancement of
Expenses, as the case may be, and the Company may not refer to or introduce into
evidence any determination pursuant to Section 12(a) of this Agreement adverse
to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or
arbitration pursuant to this Section 14, Indemnitee shall not be required to
reimburse the Company for any advances pursuant to Section 10 until a final
determination is made with respect to Indemnitee's
entitlement to indemnification (as to which all rights of appeal
have been exhausted or lapsed).
(c) If a
determination shall have been made pursuant to Section 12(a) of this Agreement
that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding or arbitration commenced pursuant
to this Section 14, absent (i) a misstatement by Indemnitee of a material fact,
or an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law.
(d) The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 14 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.
(e) The
Company shall indemnify and hold harmless Indemnitee to the fullest extent
permitted by law against all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after the Company's receipt of such written request)
advance to Indemnitee, to the fullest extent permitted by applicable law, such
Expenses which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee (i) to enforce his rights under,
or to recover damages for breach of, this Agreement or any other
indemnification, advancement or contribution agreement or provision of the
Company's By-Laws now or hereafter in effect; or (ii) for recovery or advances
under any insurance policy maintained by any person for the benefit of
Indemnitee, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance, contribution or insurance recovery,
as the case may be.
(f)
Interest shall be paid by the Company to Indemnitee at the legal rate under
Delaware law for amounts which the Company indemnifies or is obliged to
indemnify for the period commencing with the date on which Indemnitee requests
indemnification, contribution, reimbursement or advancement of any Expenses and
ending with the date on which such payment is made to Indemnitee by the
Company.
15.
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 Indemnitee 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, participating in or defending any
Proceedings, and any and all 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 judgments, fines penalties and
amounts paid in settlement) in connection with any and all Proceedings from time
to time actually paid or claimed, reasonably anticipated or proposed to be paid.
The trustee of the Trust (the "Trustee") shall be a bank or trust company or
other individual or entity chosen by the Indemnitee and reasonably acceptable to
the Company. Nothing in this Section 15 shall relieve the Company of any of its
obligations under this Agreement. The amount or amounts to be deposited in the
Trust pursuant to the foregoing funding obligation shall be determined by mutual
agreement of the Indemnitee and the Company or, if the Company and the
Indemnitee are unable to reach such an agreement, by Independent Counsel
selected in accordance with Section 12(b) of this Agreement. The terms of the
Trust shall provide that, except upon the consent of both the Indemnitee and the
Company, upon a Change in Control: (a) the Trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee; (b)
the Trustee shall advance, to the fullest extent permitted by applicable law,
within two (2) business days of a request by the Indemnitee and upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company, any
and all Expenses to the Indemnitee; (c) the Trust shall continue to be funded by
the Company in accordance with the funding obligations set forth above; (d) 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 (e) all unexpended funds in such Trust shall revert to the
Company upon mutual agreement by the Indemnitee and the Company or, if the
Indemnitee and the Company are unable to reach such an agreement, by Independent
Counsel selected in accordance with Section 12(b) of this Agreement, that the
Indemnitee has been fully indemnified under the terms of this Agreement. The
Trust shall be governed by Delaware law (without regard to its conflicts of laws
rules) and the Trustee shall consent to the exclusive jurisdiction of the
Delaware Court in accordance with Section 23 of this Agreement.
16.
SECURITY. Notwithstanding anything herein to the contrary, to the extent
requested by the Indemnitee and approved by the Board, the Company may at any
time and from time to time provide security to the Indemnitee for the Company's
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral. Any such security, once provided to the Indemnitee, may not
be revoked or released without the prior written consent of the
Indemnitee.
17.
NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) The
rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Company's
By-Laws, any agreement, a vote of stockholders or a resolution of directors, or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in applicable law, whether by statute or judicial decision,
permits greater indemnification or advancement of Expenses than would be
afforded currently under the Company's By-Laws or 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. No right or remedy herein conferred
is intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise;
provided, however, that to the extent the provisions of this Agreement are
inconsistent with the Company's By-Laws and this Agreement provides Indemnitee
with a greater benefit, the provisions of this Agreement shall apply. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other right or
remedy.
(b) The
DGCL and the Company's By-Laws permit the Company to purchase and maintain
insurance or furnish similar protection or make other arrangements including,
but not limited to, providing a trust fund, letter of credit, or surety bond
("Indemnification Arrangements") on behalf of Indemnitee against any liability
asserted against him or incurred by or on behalf of him or in such capacity as a
director, officer, employee or agent of the Company, or arising out of his
status as such, whether or not the Company would have the power to indemnify him
against such liability under the provisions of this Agreement or under the DGCL,
as it may then be in effect. The purchase, establishment, and maintenance of any
such Indemnification Arrangement shall not in any way limit or affect the rights
and obligations of the Company or of the Indemnitee under this Agreement except
as expressly provided herein, and the execution and delivery of this Agreement
by the Company and the Indemnitee shall not in any way limit or affect the
rights and obligations of the Company or the other party or parties thereto
under any such Indemnification Arrangement.
(c) To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, trustees, partners, managing
members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company, 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 such director,
officer, trustee, partner, managing member, fiduciary, employee or agent under
such policy or policies. If, at the time the Company receives notice from any
source of a Proceeding as to which Indemnitee is a party or a participant (as a
witness or otherwise), the Company has director and officer liability insurance
in effect, the Company shall give prompt notice 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 Indemnitee, all amounts payable as a
result of such Proceeding in accordance with the terms of such
policies.
(d) In
the event of any 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 take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.
(e) The
Company's obligation to indemnify or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director,
officer, trustee, partner, managing member, fiduciary, employee or agent of any
other Enterprise shall be reduced by any amount Indemnitee has actually received
as indemnification or advancement of expenses from such Enterprise.
18.
DURATION OF AGREEMENT. All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee serves as a
director or officer of the Company or as a director, officer, trustee, partner,
managing member, fiduciary, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other Enterprise
which Indemnitee serves at the request of the Company and shall continue
thereafter so long as Indemnitee shall be subject to any possible Proceeding
(including any rights of appeal thereto and any Proceeding commenced by
Indemnitee pursuant to Section 14 of this Agreement) by reason of his Corporate
Status, whether or not he is acting in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement.
19.
SEVERABILITY. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, each portion of any Section, paragraph
or sentence of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby and shall remain
enforceable to the fullest extent permitted by law; (b) such provision or
provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section, paragraph or
sentence of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested
thereby.
20.
ENFORCEMENT AND BINDING EFFECT.
(a) The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director, or officer or key employee of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director, or officer or key employee of the Company.
(b)
Without limiting any of the rights of Indemnitee under the By-Laws as they may
be amended from time to time, this Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter
hereof.
(c) The
indemnification and advancement of expenses provided by or granted pursuant to
this Agreement shall be binding upon and be enforceable by the parties hereto
and their respective successors and assigns (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), shall continue as
to an Indemnitee who has ceased to be a director, officer, employee or agent of
the Company or of any other Enterprise at the Company's request, and shall inure
to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees,
executors and administrators and other legal representatives.
(d) The
Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company, by written agreement in form and substance
satisfactory to the 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.
(e) The
Company and Indemnitee agree herein that a monetary remedy for breach of this
Agreement, at some later date, may be inadequate, impracticable and difficult of
proof, and further agree that such breach may cause Indemnitee irreparable harm.
Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement
by seeking injunctive relief and/or specific performance hereof, without any
necessity of showing actual damage or irreparable harm and that by seeking
injunctive relief and/or specific performance, Indemnitee shall not be precluded
from seeking or obtaining any other relief to which he may be entitled. The
Company and Indemnitee further agree that Indemnitee shall be entitled to such
specific performance and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, without the necessity
of posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be
required of Indemnitee by the Court, and the Company hereby waives any such
requirement of such a bond or undertaking.
21.
MODIFICATION AND WAIVER. Except as provided in Section 17(a), no
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing
waiver.
22.
NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) if delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, or (iii) sent by a courier
service (paid by sender) on the third (3rd) business day after the date on which
it is so mailed:
(a) If to
Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as Indemnitee shall provide in writing to the
Company.
(b) If to
the Company, to:
Standard
Microsystems Corporation
80 Arkay
Drive
Hauppauge,
New York 11788
Attention:
General
Counsel
or to any
other address as may have been furnished to Indemnitee in writing by the
Company.
23.
APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and
Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought
only in the Delaware Court and not in any other state or federal court in the
United States of America or any court in any other country; (b) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement; (c)
waive any objection to the laying of venue of any such action or proceeding in
the Delaware Court; and (d) waive, and agree not to plead or to make, any claim
that any such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum, or is subject (in whole or in
part) to a jury trial.
24.
IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this
Agreement.
25.
MISCELLANEOUS. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
thereof.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the
day and year first above written.
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STANDARD
MICROSYSTEMS CORPORATION
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INDEMNITEE
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By:
/s/
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By:
/s/
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By:
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Name:
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Address:
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