EXHIBIT 99.3
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
“ Agreement ”) is entered into as of
October 5, 2005, by and among SigmaTel, Inc., a Delaware
corporation (“ Purchaser ”), Apogee
Technology, Inc., a Delaware corporation (“
Seller ”), and Herb M. Stein, H.M. Stein
Associates and Sheryl B. Stein, each a stockholder of Seller
(together, the “ Principal Stockholders
”).
RECITALS
WHEREAS, Seller, Purchaser and the
Principal Stockholders are party to that certain Asset Purchase
Agreement dated as of even date herewith by and among Seller,
Purchaser and certain stockholders of Seller identified on Schedule
A to such agreement (the “ Asset Purchase
Agreement ”) pursuant to which Purchaser has agreed
to acquire, and Seller has agreed to sell, certain assets of
Seller;
WHEREAS, capitalized terms used in
this Agreement and not otherwise defined shall have the meaning
given such terms in the Asset Purchase Agreement irrespective of
the effectiveness of such agreement;
WHEREAS, pursuant to the terms of
this Agreement, Seller and the Principal Stockholders have agreed
to provide a separate indemnity to Purchaser for Qualifying
Indemnifiable Losses (as defined below), which indemnity shall be
in addition to and separate from any indemnity provided for under
the Asset Purchase Agreement; and
WHEREAS, in order to induce
Purchaser to purchase the Acquired Assets and as a condition to the
closing of the transactions contemplated by the Asset Purchase
Agreement, the Principal Stockholders are willing, in order to
induce Purchaser to enter into this Agreement, to provide certain
representations, covenants and indemnifications to Purchaser on the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the representations, warranties and covenants herein contained and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1.
Indemnification by Seller and
Principal Stockholders .
(a)
Subject to the terms and conditions hereof, and more specifically
to the limitations set forth in Section 4 hereof, Seller and each
of the Principal Stockholders, jointly and severally, agree to
indemnify, defend and hold harmless Purchaser, its stockholders,
officers, directors, employees, attorneys, all subsidiaries and
Affiliates of Purchaser, and the respective officers, directors,
employees and attorneys of such entities (all such Persons and
entities being collectively referred to as the “
Purchaser Group
”) from
such and against, for and in respect of any and all Losses incurred
by Purchaser and/or any other member of the Purchaser Group by
reason of, resulting from, based upon or arising out of any of the
following (collectively, “ Qualifying Indemnifiable Losses
”):
(i)
any Losses
Purchaser or its Affiliates incur as a result of or in connection
with any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand or order, decree,
judgment or directive
related to or based upon Seller’s failure to obtain the
approval of its stockholders, or any subset thereof, to the Asset
Purchase Agreement, the Ancillary Agreements or the Transaction and
other actions contemplated by the Asset Purchase Agreement and the
Ancillary Agreements; or
(ii)
any breach by
Seller of this Agreement.
No waiver or
satisfaction of any condition to Closing or due diligence or other
investigation made by or on behalf of Purchaser with respect to
Seller, the Principal Stockholders or the Acquired Assets shall be
deemed to affect Purchaser Group’s reliance on the
representations, warranties, covenants and agreements made by
Seller and the Principal Stockholders and shall not be deemed to be
a waiver of the Purchaser Group’s rights to seek and obtain
indemnification or reimbursement as herein provided.
2.
Claims and
Procedure for Indemnification .
(a)
Claim Notice
Procedure . The party seeking
indemnification hereunder (the “ Indemnitee ”), shall give to the
party from which indemnification is sought (the “
Indemnitor
”) written
notice (a “ Claim
Notice ”) specifically
identifying any bona fide claim which is subject to the indemnity
obligations set forth in this Agreement, within thirty (30) days of
having notice of such claim; provided, however, that if the claim
involves a Third Party Claim, then the procedures in
Section 2(c) shall apply. The Claim Notice shall set
forth, to the best of the Indemnitee’s knowledge, all facts
and other information with respect to the claim, including without
limitation the anticipated amount of Losses or reasonable estimate
thereof. The failure to give prompt notice shall not affect
the rights of the Indemnitee to indemnity hereunder, except to the
extent that such failure either shall have prejudiced the
Indemnitor in the defense of such claim or shall have increased the
amount of the obligation of the Indemnitor.
(b)
Objection to
Claim Notice .
An Indemnitor may
object to a Claim Notice by delivering written notice to the
Indemnitee (an “ Objection ”) within thirty (30)
days after the receipt of the applicable Claim Notice. If the
Indemnitor does not timely object to a Claim Notice in accordance
with this paragraph (b) of this Section 2, the Indemnitor
shall, within sixty (60) days after receipt of the Claim
Notice, either pay the amount of the claim set forth in the Claim
Notice, if a monetary amount is involved, in accordance with this
Agreement, or if a Third Party Claim is involved, have the right to
assume the defense of such claim as set forth in Section 2(c)
below. If an Objection has been made, the Indemnitor shall
have an additional thirty (30) days to resolve the dispute with the
Indemnitee in accordance with this paragraph (b) of
Section 2. Once an Objection has been made, the
Indemnitor and Indemnitee shall attempt in good faith to agree upon
the rights of the respective parties with respect to the claim or
claims relating to the Claim Notice. Any such agreement shall
be set forth in a written memorandum signed by both parties.
If the parties cannot come to such agreement within thirty (30)
days after receipt by the Indemnitee of the Objection, the parties
shall attempt to resolve such matter first by submission to
non-binding mediation in Austin, Texas. Except as otherwise
agreed to in writing by the Indemnitor and Indemnitee, such matter
shall be addressed in the following manner: (i) the
Indemnitor and Indemnitee will promptly provide each other with a
detailed description of each of their respective positions
regarding the claim, including any supporting evidence, documents
or materials as reasonably requested by each other; (ii) senior
executives representing each of the Indemnitor and Indemnitee will
meet to discuss and attempt to resolve the Objection or claim; and
(iii) if the Objection or claim is not resolved as contemplated by
clause (ii) above, Indemnitor and Indemnitee will, by mutual
consent, select an independent third party to mediate such
controversy. Any communications made pursuant to this
Section 2(b) shall be deemed to be treated as settlement
negotiations pursuant to Federal Rules of Evidence 408 and shall
not be admissible in court for any purpose.
(c)
Defense of
Third Party Claims . Should any claim be
made, or Proceeding (including, without limitation, a binding
arbitration or an audit by any taxing authority) be instituted
against
Indemnitee which, if
prosecuted successfully, would be a matter for which Indemnitee is
entitled to indemnification under this Agreement (a “
Third Party Claim
”), the
obligations and liabilities of the parties hereunder with respect
to such Third Party Claim shall be subject to the following terms
and conditions:
(i)
Following the
Indemnitor’s receipt of a Claim Notice with respect to a
Third Party Claim, Indemnitor may, at its option, (i) undertake
control of the defense thereof by counsel of its own choosing
reasonably acceptable to Indemnitee or (ii) decline to assume
control of but participate in the defense thereof provided that
such participation by Indemnitor shall be at its own expense.
Indemnitee may participate in the defense through its own counsel
at its own expense. If, however, Indemnitor fails or refuses
to undertake the defense of such Third Party Claim within thirty
(30) days after written notice of such claim has been delivered to
Indemnitor by Indemnitee,
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