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EXHIBIT 10.4
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT is made and entered into this ___ day
of ____________________, 1998 between Inet Technologies, Inc., a Delaware
corporation (the "Corporation"), and _____________________ ("Indemnitee").
RECITALS:
A. Indemnitee, an executive officer of the Corporation
and a member of the Board of Directors, performs a valuable service in such
capacity for the Corporation; and
B. The stockholders of the Corporation have adopted
By-laws (the "By-laws") providing for the indemnification of the officers,
directors, agents and employees of the Corporation to the maximum extent
authorized by Section 145 of the Delaware General Corporation Law, as amended
("DGCL"); and
C. The By-laws and the DGCL, by their non-exclusive
nature, permit contracts between the Corporation and the members of its Board
of Directors and officers with respect to indemnification of such directors and
officers; and
D. In accordance with the authorization as provided by
the DGCL, the Corporation has purchased and presently maintains a policy or
policies of Directors and Officers Liability Insurance ("D & O Insurance"),
covering certain liabilities which may be incurred by its directors and
officers in the performance of their duties as directors or officers of the
Corporation; and
E. As a result of developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as
to the extent of protection afforded members of the Board of Directors and
executive officers of the Corporation by such D & O Insurance and by statutory
and by-law indemnification provisions; and
F. In order to induce Indemnitee to continue to serve as
an executive officer and a member of the Board of Directors of the Corporation,
the Corporation has determined and agreed to enter into this contract with
Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued
service as an executive officer and a member of the Board of Directors after
the date hereof, the parties hereto agree as follows:
1. INDEMNIFICATION OF INDEMNITEE. The Corporation
hereby agrees to hold harmless and indemnify Indemnitee and any partnership,
corporation, trust or other entity of which Director is or was a partner,
shareholder, trustee, director, officer, employee or agent (Indemnitee and each
such partnership, corporation, trust or other entity being hereinafter referred
to collectively as an "Indemnitee") to the fullest extent authorized or
permitted by the provisions of the DGCL, as may be amended from time to time.
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2. ADDITIONAL INDEMNITY. Subject only to the exclusions
set forth in Section 3 hereof, the Corporation hereby further agrees to hold
harmless and indemnify Indemnitee's:
a. against any and all expenses (including
attorney's fees), witness fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Corporation) to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, officer, employee or
agent of the Corporation or any subsidiary of the Corporation, or is or was
serving or at any time serves at the request of the Corporation or any
subsidiary of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, if Director acted in good faith and in a manner Director
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Director's conduct was unlawful; and
b. otherwise to the fullest extent as may be
provided to Indemnitee by the Corporation under the non-exclusivity provisions
of Article XI of the By-laws of Corporation and the DGCL.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity
pursuant to Section 2 hereof shall be paid by the Corporation:
a. except to the extent the aggregate of losses
to be indemnified thereunder exceeds the sum of such losses for which the
Indemnitee is indemnified pursuant to Section I hereof or pursuant to any D & O
Insurance purchased and maintained by the Corporation;
b. in respect to remuneration paid to Indemnitee
if it shall be determined by a final judgment or other final adjudication that
such remuneration was in violation of law;
c. on account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Corporation pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law,
d. on account of Indemnitee's conduct which is
finally adjudged to have been knowingly fraudulent or deliberately dishonest,
or to constitute willful misconduct;
e. on account of Indemnitee's conduct which is
the subject of an action, suit or proceeding described in Section 7(c)(ii)
hereof;
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f. on account of any action, claim or proceeding
(other than a proceeding referred to in Section 8(b) hereof) initiated by the
Indemnitee unless such action, claim or proceeding was authorized in the
specific case by action of the Board of Directors;
g. if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is not
lawful (and, in this respect, both the Corporation and Indemnitee have been
advised that the Securities and Exchange Commission believes that
indemnification for liabilities arising under the federal securities laws is
against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication).
4. CONTRIBUTION. If the indemnification provided in
Sections 1 and 2 hereof is unavailable by reason of a Court decision described
in Section 3(g) hereof based on grounds other than any of those set forth in
paragraphs (b) through (f) of Section 3 hereof, then in respect of any
threatened, pending or completed action, suit or proceeding in which the
Corporation is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), the Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee
in such proportion as is appropriate to reflect (i) the relative benefits
received by the Corporation on the one hand and Indemnitee on the other hand
from the transaction from which such action, suit or proceeding arose, and (ii)
the relative fault of the Corporation on the one hand and of Indemnitee on the
other in connection with the events which resulted in such expenses, judgments,
fines or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Corporation on the one hand and of
Indemnitee on the other shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. The Corporation agrees that it would
not be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation or any other method of allocation which does
not take account of the foregoing equitable considerations.
5. CONTINUATION OF OBLIGATIONS. All agreements and
obligations of the Corporation contained herein shall continue during the
period Indemnitee is a director, officer, employee or agent of the Corporation
or any subsidiary of the Corporation (or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made in respect of any claim,
issue or matter as to which Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit
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or proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnitee was an officer of the Corporation or serving in any other
capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than
thirty (30) days after receipt by Indemnitee of notice of the commencement of
any action, suit or proceeding, Indemnitee will, if a claim in respect thereof
is to be made against the Corporation under this Agreement, notify the
Corporation of the commencement thereof; but the omission so to notify the
Corporation will not relieve it from any liability which it may have to
Indemnitee otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Indemnitee notifies the Corporation of
the commencement thereof:
a. the Corporation will be entitled to
participate therein at its own expense;
b. except as otherwise provided below, to the
extent that it may wish, the Corporation jointly with any other indemnifying
party similarly notified will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so as to assume the defense thereof,
the Corporation will not be liable to Indemnitee under this Agreement for any
legal or other expenses subsequently incurred by Indemnitee in connection with
the defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ its
counsel in such action, suit or proceeding but the fees and expenses of such
counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of Indemnitee unless (i) the employment
of counsel by Indemnitee has been authorized by the Corporation, (ii)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Corporation and Indemnitee in the conduct of the defense
of such action or (iii) the Corporation shall not in fact have employed counsel
to assume the defense of such action, in each of which cases the fees and
expenses of Indemnitee's separate counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to assume the defense of
any action, suit or proceeding brought by or on behalf of the Corporation or as
to which Indemnitee shall have made the conclusion provided for in (ii) above;
and
c. the Corporation shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Corporation
shall be permitted to settle any action except that it shall not settle any
action or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither the Corporation nor
Indemnitee will unreasonably withhold its consent to any proposed settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
a. In the event that Indemnitee employs his own
counsel pursuant to Section 6(b)(i) through (iii) above, the Corporation shall
advance to Indemnitee, prior to any final disposition of any threatened or
pending action, suit or proceeding, whether civil, criminal, administrative or
investigative, any and all reasonable expenses (including legal fees and
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expenses) incurred in investigating or defending any such action, suit or
proceeding within ten (10) days after receiving copies of invoices presented to
Indemnitee for such expenses.
b. Indemnitee agrees that Indemnitee will
reimburse the Corporation for all reasonable expenses paid by the Corporation
in defending any civil or criminal action, suit or proceeding against
Indemnitee in the event and only to the extent it shall be ultimately
determined by a final judicial decision (from which there is no right of
appeal) that Indemnitee is not entitled, under the provisions of the DGCL, the
By-laws, this Agreement or otherwise, to be indemnified by the Corporation for
such expenses.
c. Notwithstanding the foregoing, the
Corporation shall not be required to advance such expenses to Indemnitee if
Indemnitee (i) commences any action, suit or proceeding as a plaintiff unless
such advance is specifically approved by a majority of the Board of Directors
or (ii) is a party to an action, suit or proceeding brought by the Corporation
and approved by a majority of the Board which alleges willful misappropriation
of corporate assets by Indemnitee, disclosure of confidential information in
violation of Indemnitee's fiduciary or contractual obligations to the
Corporation, or any other willful and deliberate breach in bad faith of
Indemnitee's duty to the Corporation or its shareholders.
8. PROCEDURE. Any indemnification and advances provided
for in Section 1 and Section 2 shall be made no later than forty-five (45) days
after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Corporation's
Certificate of Incorporation by Bylaws providing for indemnification, is not
paid in full by the Corporation within forty-five (45) days after a written
request for payment thereof has first been received by the Corporation,
Indemnitee may, but need not, at any time thereafter bring an action against
the Corporation to recover the unpaid amount of the claim and, subject to
Section 12 of this Agreement, Indemnitee shall also be entitled to be paid for
the expenses (including attorneys' fees) of bringing such action. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in connection with any action, suit or proceeding in
advance of its final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the Corporation to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Corporation and Indemnitee shall be entitled to receive
interim payments of expenses pursuant to Subsection 2(7)(a) unless and until
such defense may be finally adjudicated by court order or judgment from which
no further right of appeal exists. It is the parties' intention that if the
Corporation contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Corporation (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Corporation (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
9. ENFORCEMENT.
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a. The Corporation expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
the Corporation hereby in order to induce Indemnitee to continue as an executive
officer and member of the Board of Directors of the Corporation, and
acknowledges that Indemnitee is relying upon this Agreement in continuing in
such capacity.
b. In the event Indemnitee is required to bring
any action to enforce rights or to collect moneys due under this Agreement and
is successful in such action, the Corporation shall reimburse Indemnitee for
all Indemnitee's reasonable fees and expenses in bringing and pursuing such
action.
10. SUBROGATION. In the event of payment under this
agreement, the Corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
Indemnitee by this Agreement shall not be exclusive of any other right which
Indemnitee may have or hereafter acquire under any statute, provision of the
Corporation's Certificate of Inthe Corporation or By-laws, agreement, vote of
stockholders or directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office.
12. PARTIAL INDEMNIFICATION. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the expenses, judgments, fines or
penalties actually or reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines or penalties to which
Indemnitee is entitled.
13. SURVIVAL OF RIGHTS. The rights conferred on
Indemnitee by this Agreement shall continue after Indemnitee has ceased to be a
director, officer, employee or other agent of the Corporation and shall inure
to the benefit of Indemnitee's heirs, executors and administrators.
14. SEPARABILITY. Each of the provisions of this
Agreement is a separate and distinct agreement and independent of the others,
so that if any or all of the provisions hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof or the
obligation of the Corporation to indemnify the Indemnitee to the full extent
provided by the By-laws or the DGCL.
15. GOVERNING LAW; CONSENT TO JURISDICTION. This
Agreement shall be interpreted and enforced in accordance with the laws of the
State of Delaware. The Corporation
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and Indemnitee each hereby irrevocably consent to the jurisdiction of the
courts of the State of Delaware for all purposes in connection with any action
or proceeding which arises out of or relates to this Agreement and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Delaware.
16. BINDING EFFECT. This Agreement shall be binding upon
Indemnitee and upon the Corporation, its successors and assigns, and shall
inure to the benefit of Indemnitee, his heirs, personal representatives and
assigns and to the benefit of the Corporation, its successors and assigns.
17. AMENDMENT AND TERMINATION. No amendment,
modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties hereto.
18. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
INET TECHNOLOGIES, INC.,
a Delaware corporation
By:
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Name:
Title:
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Indemnitee
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