Exhibit 10.6
INDEMNIFICATION
AGREEMENT
INDEMNIFICATION AGREEMENT, made this
day of August, 2006 between Nextest
Systems Corporation, a Delaware corporation (the
“Company” ) and
(the “Indemnitee” ).
BACKGROUND:
A. The Indemnitee is a director
and/or officer of the Company.
B. Highly competent persons have
become more reluctant to serve publicly-held corporations as
directors 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.
C. In recognition of
Indemnitee’s need for substantial protection against personal
liability in order to enhance Indemnitee’s continued service
to the Company in an effective manner and Indemnitee’s
reliance on the provisions of the Company’s Restated
Certificate of Incorporation, as amended from time to time (“
Certificate of Incorporation ”) and the
Company’s Bylaws, as amended from time to time (the “
Bylaws ”) requiring indemnification of the
Indemnitee to the fullest extent permitted by law, and in part to
provide Indemnitee with specific contractual assurance that the
protection promised by the Certificate of Incorporation and Bylaws
will be available to Indemnitee (regardless of, among other things,
any amendment to or revocation of the Certificate of Incorporation
or Bylaws or any change in the composition of the Company
’ s Board of Directors or acquisition
transaction relating to the Company), the Company wishes to provide
in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or
complete) permitted by law and as set forth in this
Agreement.
D. The Certificate of Incorporation,
the Bylaws and the General Corporation Law of the State of Delaware
(“ 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.
E. It is reasonable, prudent and
necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, the foregoing
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 indemnified.
F. This Agreement is a supplement to
and in furtherance of the Certificate of Incorporation and Bylaws
and any resolutions adopted pursuant thereto and shall not be
deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder.
AGREEMENT:
Section 1. Basic
Indemnification Agreement , (a) If Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened to be
made a party to or witness or
other participant in, a Claim (as defined in
Section 12(b) herein) by reason of (or arising in part out of)
an Indemnifiable Event (as defined in Section 12(d) herein),
the Company will indemnify Indemnitee to the fullest extent
permitted by law, including but not limited to criminal action or
proceedings where the Indemnitee had no reasonable cause to believe
his/her conduct was unlawful, as soon as practicable but in any
event no later than 30 days after written demand is presented to
the Company, from and against any and all Expenses (as defined in
Section 12(c) herein), judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of the Claim
actually and reasonably incurred by or on behalf of Indemnitee in
connection with the Claim and any federal, state, local or foreign
taxes imposed on Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement. If requested by
Indemnitee in writing, the Company will advance (within ten
business days of written request) any and all Expenses to
Indemnitee (an “ Expen s e
Advance ”). Notwithstanding anything in this
Agreement to the contrary, and except as provided in
Section 3, prior to a Change of Control (as defined in
Section 12 herein) and except as set forth in Sections 1
(b) and 9, Indemnitee is not entitled to indemnification
pursuant to this Agreement in connection with any Claim
(i) initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has joined in
or consented to the initiation of the Claim; (ii) made on
account of Indemnitee’s conduct which constitutes a breach of
Indemnitee’s duty of loyalty to the Company or its
stockholders or which involves intentional misconduct or a knowing
violation of the law, pursuant to a final judgment without appeal;
or (iii) pursuant to a final judgment rendered against
Indemnitee for profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”).
(b) Notwithstanding the foregoing,
(i) the indemnification obligations of the Company under
Section l(a) are subject to the condition that the Reviewing Party
(as defined in Section 12(f)) or special independent counsel
referred to in Section 2 has not determined in writing that
Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make
an Expense Advance pursuant to Section l(a) is subject to the
condition that the Company receives an undertaking that, if, when
and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under
applicable law, the Company will be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in the Court of Chancery
of the State of Delaware (the “ Delaware Court
”) to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law will not be binding and Indemnitee
will not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee’s obligation to reimburse
the Company for Expense Advances will be unsecured and no interest
will be charged thereon. If there has not been a Change in Control,
the Reviewing Party will be selected by the Board of Directors, and
if there has been a Change in Control, the Reviewing Party will be
the special independent counsel referred to in Section 2
hereof. If there has been no determination by the Reviewing Party
or if the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee will have the right to commence
litigation in the Delaware Court seeking an initial determination
by the court or challenging any such
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determination by the Reviewing Party or any
aspect thereof and the Company hereby consents to service of
process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise will be conclusive and binding on the
Company and Indemnitee. The Company will indemnify Indemnitee for
Expenses incurred by Indemnitee in connection with the successful
establishment or enforcement, in whole or in part, by Indemnitee of
Indemnitee’s right to indemnification or advances
hereunder.
Section 2. Change in
Control . The Company
agrees that, if there is a Change in Control of the Company (other
than a Change in Control which has been approved by two- thirds or
more of the Company ’ s Board of Directors who
were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the
rights of Indemnitee to indemnity payments and Expense Advances
under this Agreement or any other agreement, the Bylaws or
Certificate of Incorporation now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company will seek legal advice
only from special independent counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably
withheld or delayed) and who has not otherwise performed services
for the Company or for Indemnitee within the last five years (other
than in connection with such matters). If Indemnitee and the
Company are unable to agree on the selection of the special
independent counsel, special independent counsel shall be selected
by lot from among at least five law firms, having more than fifty
attorneys, with offices in the State of Delaware, having a rating
of “av” or better in the then current Martindale
Hubbell Law Directory and having attorneys which specialize in
corporate law. This selection will be made in the presence of
Indemnitee (and his legal counsel or either of them, as Indemnitee
may elect). Selected counsel, among other things, will, within 90
days of its retention, render its written opinion to the Company
and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law. The Company will
pay all reasonable fees and disbursements relating to the retention
of the special independent counsel referred to above and to fully
indemnify this counsel against any and all expenses (including
attorneys’ fees), claims, liabilities, and damages arising
out of or relating to this Agreement or its engagement pursuant
hereto.
Section 3. Additional
Expenses/Expense Advance . The Company shall indemnify Indemnitee
against any and all expenses (including attorneys’ fees) and,
if requested by Indemnitee in writing, will advance any and all
expenses (within ten business days from the date of the written
request) to Indemnitee which are or will be incurred by Indemnitee
in connection with any Claim asserted against or action brought by
Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other
agreement, the Bylaws or Certificate of Incorporation now or
hereafter in effect relating to Claims for Indemnifiable Events or
(ii) recovery under any directors’ and officers’
liability insurance policies maintained by the Company, regardless
of whether Indemnitee ultimately is determined to be entitled to
indemnification, advance expense payment or insurance recovery, as
the case may be. Indemnitee will qualify for advances solely upon
the execution and delivery to the Company of an undertaking
providing that Indemnitee undertakes to repay the advance up to the
amount that is decided by a final judicial determination (which all
rights of appeal have been exhausted or have lapsed) that
Indemnitee is not entitled to be indemnified by the Company.
Indemnitee’s obligation to reimburse the Company Expense
Advanced shall be unsecured.
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Section 4. Partial
Indemnity, If
Indemnitee is entitled under any provisions of this Agreement to
indemnification by the Company of some or a portion of the
Expenses, liabilities, judgments, fines, penalties and amounts paid
in settlement of a Claim but not, however, for all of the total
amount thereof, the Company will indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Indemnitee will be
indemnified against all Expenses incurred in connection
therewith.
Section 5.
Burden of Proof . In
connection with any determination by the Reviewing Party or by
special independent counsel as defined in Section 2 as to
whether Indemnitee is entitled to be indemnified hereunder the
Reviewing Party or court will presume that the Indemnitee has
satisfied the applicable standard of conduct and is entitled to
indemnification, and the burden of proof will be on the Company to
establish that Indemnitee is not so entitled.
Section 6. Reliance on
Safe Harbor . For the
purposes of this Agreement, Indemnitee shall be deemed to have
acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company if
Indemnitee’s actions or omissions to act are taken in good
faith reliance on the records of the Company, including its
financial statements, or on information, opinions, reports, or
statements furnished to Indemnitee by the officers or employees of
the Company in the course of their duties, or by committees of the
Company’s Board of Directors, or by any other person
(including legal counsel, accountants, consultants, and financial
advisors) as to matters Indemnitee reasonably believes are within
such other person’s professional or expert competence and who
has been selected with reasonable care by or on behalf of the
Company. In addition, the knowledge and/or actions, or failures to
act, of any director, officer, agent or employee of the Company
shall not be imputed to Indemnitee for the purposes of determining
the right to indemnity hereunder.
Section 7. No
Presumption . For
purposes of this Agreement, the termination of any action, suit or
proceeding by judgment, order, settlement (whether with or without
court approval), conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any particular
belief or that an indemnification is not permitted by applicable
law. In addition, neither the failure of the Reviewing Party to
have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an
actual determination by the Reviewing Party that Indemnitee has not
met such standard of conduct or did not have such belief, prior to
the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under
applicable law shall be a defense to Indemnitee’s claim nor
create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular
belief.
Section 8. Notification
and Defense of Claim . Within 30 days after receipt by Indemnitee of
notice of the commencement of a Claim which may involve an
Indemnifiable Event (as defined in Section 12(d)), Indemnitee
must, if a claim in respect thereof is to be made against the
Company under this Agreement, submit to the Company a written
notice identifying the proceeding. However, the omission to notify
the Company will not relieve it from any
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liability which it may have to Indemnitee under
this Agreement unless the Company is unable to participate, at its
own expense, in its own defense due to the lack of notice. With
respect to any Claim as to which Indemnitee notifies the Company of
the commencement thereof:
(a) the Company will be entitled to
participate therein at its own expense;
(b) the Company will be entitled to
assume the defense thereof, with counsel satisfactory to the
Indemnitee; provided that if Indemnitee believes, after
consultation with counsel selected by Indemnitee, that (i) the
use o
