Exhibit 10.5
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement (
“Agreement” ) is entered into as of the
day of
, 200 by and between Magma Design
Automation, Inc., a Delaware corporation (the
“Company” ), and
( “Indemnitee” ).
RECITALS
A. The Company and Indemnitee
recognize the continued difficulty in obtaining liability insurance
for the Company’s directors and officers, the significant
increases in cost of such insurance and the general reductions in
the coverage of such insurance.
B. The Company and Indemnitee
further recognize the substantial increase in corporate litigation
in general, subjecting directors and officers to expensive
litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited.
C. The Company desires to attract
and retain the services of highly qualified individuals, such as
Indemnitee, to serve the Company and, in part, in order to induce
Indemnitee to continue to provide services to the Company, wishes
to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.
D. In view of the considerations set
forth above, the Company desires that Indemnitee be indemnified by
the Company as set forth herein.
NOW, THEREFORE, the Company and
Indemnitee hereby agree as follows:
1. Indemnification
.
(a) Indemnification of
Expenses . The Company shall indemnify Indemnitee to the
fullest extent permitted by law if Indemnitee was or 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, any
threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry
or investigation that Indemnitee in good faith believes might lead
to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a
“Claim” ) by reason of (or arising in part out
of) any event or occurrence related to the fact that Indemnitee is
or was a director or officer of the Company, or any subsidiary of
the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity (hereinafter an
“Indemnifiable Event” ) against any and all
expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection with investigating,
defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in,
any such action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), losses, claims,
damages, liabilities, judgments, fines, penalties and amounts paid
in settlement (if such settlement is approved in advance
by the Company, which approval shall
not be unreasonably withheld) of such 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,
including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses
(collectively, hereinafter “Expenses” ) 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, and, with respect to any criminal action, suit or
proceeding, Indemnitee had no reasonable cause to believe
Indemnitee’s conduct was unlawful.
(b) Mandatory Payment of
Expenses . Notwithstanding any other provision of this
Agreement other than Section 8 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise,
including, without limitation, the dismissal of a Claim without
prejudice, in defense of any Claim referred to in
Section (1)(a) hereof or in the defense of any Claim, issue or
matter therein, Indemnitee shall be indemnified against all
Expenses incurred by Indemnitee in connection therewith.
2. Expenses; Indemnification
Procedure .
(a) Advancement of Expenses .
The Company shall pay all Expenses incurred by Indemnitee in
connection with the investigation, defense, settlement or appeal of
any civil or criminal Claim referenced in Section 1(a) hereof
in advance of the final disposition of such Claim. Indemnitee
hereby undertakes to repay such amounts advanced only if, and to
the extent that, it shall ultimately be determined that Indemnitee
is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee following a request therefor, but in any
event no later than sixty days after receipt by the Company of
written demand from Indemnitee for such advances.
(b) Notice/Cooperation by
Indemnitee . Indemnitee shall, as a condition precedent to
Indemnitee’s right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification or
advancement will or could be sought under this Agreement. Notice to
the Company shall be directed to the Chief Executive Officer of the
Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in
writing to Indemnitee). In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee’s power.
(c) Procedure. Any
indemnification and advances provided for in Section 1 and
Section 2 of this Agreement shall be paid by the Company to
Indemnitee as soon as practicable after receipt of written request
from Indemnitee for such indemnification or advances, but in any
event no later than sixty days after receipt of such request. If
the Company believes that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the
Company to indemnify Indemnitee for the amount(s) claimed, the
Company may file an action in the Court of Chancery of the State of
Delaware to obtain a declaratory judgment that Indemnitee is not
entitled under applicable law to receive indemnification or
advancement from the Company (hereinafter a “Declaratory
Action” ). If the Company files a Declaratory Action,
Indemnitee shall be entitled to receive interim payments of
Expenses pursuant to Subsection 2(a) including Expenses
incurred in
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defending a Declaratory Action
unless and until the Court of Chancery of the State of Delaware
issues an order or judgment that Indemnitee is not entitled under
applicable law to receive indemnification or advancement from the
Company. If the Court of Chancery of the State of Delaware issues
an order or judgment in a Declaratory Action that Indemnitee is not
entitled under applicable law to receive indemnification or
advancement from the Company, the Company shall have no further
obligation under this Agreement, the Company’s Certificate of
Incorporation, the Company Bylaws or any other applicable law,
statute or rule to provide indemnification or advances of Expenses
to Indemnitee.
(d) No Presumptions . For
purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere ,
or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition,
neither the failure of the Company (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 Company (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.
(e) Burden of Proof . In a
Declaratory Action, the burden of proof shall be on the Company to
establish that Indemnitee is not entitled to indemnification or
advances.
(f) Notice to Insurers . If,
at the time of the receipt by the Company of a notice of a Claim
pursuant to Section 2(b) hereof, the Company has liability
insurance in effect which may cover such Claim, the Company shall
give prompt notice of the commencement of such Claim 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 Indemnitee, all amounts payable as a result of such Claim
in accordance with the terms of such policies.
(g) Selection of Counsel . In
the event the Company shall be obligated hereunder to pay the
Expenses of any Claim, the Company shall be entitled to assume the
defense of such Claim with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to
Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not
be liable to Indemnitee under this Agreement for any fees or
expenses of counsel subsequently incurred by Indemnitee with
respect to the same Claim. Notwithstanding the Company’s
assumption of the defense of any Claim, the Company shall be
obligated to pay the fees and expenses of Indemnitee counsel if
(A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) the Company shall
have reasonably concluded that there is a conflict of interest
between the Company and Indemnitee in the conduct of any such
defense such that Indemnitee needs to be separately represented, or
(C) the Company shall not continue to retain such counsel or
new counsel approved by Indemnitee, which approval shall not be
unreasonably withheld, to defend such Claim. The Company shall have
the right to conduct such defense as it sees fit in its sole
discretion, including the right to settle any Claim against
Indemnitee without the consent of the Indemnitee.
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3. Additional Indemnification
Rights; Nonexclusivity .
(a) Scope . The Company
hereby agrees to indemnify Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement,
the Company’s Certificate of Incorporation, the
Company’s Bylaws or by statute. In the ev
