Exhibit 10.I
INDEMNITY
AGREEMENT
THIS INDEMNITY
AGREEMENT (this
“Agreement”) is made as of
, 2008, by and between Mentor Graphics Corporation, an Oregon
corporation (the “Company”), and
(“Indemnitee”).
RECITALS
WHEREAS , highly competent persons have become more
reluctant to serve publicly-held corporations as directors,
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.
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 U.S.-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 Company’s amended and
restated articles of incorporation (the “Articles”)
permit, and the Company’s bylaws (the “Bylaws”)
require, indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification
pursuant to applicable provisions of the Oregon Business
Corporation Act (the “Act”). The Articles, Bylaws and
the Act 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 in order to
protect such persons against claims and expenses arising from their
services on behalf of the Company.
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, hold
harmless, exonerate 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 protected against
liabilities.
WHEREAS , this Agreement is a supplement to and in
furtherance of the Bylaws 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.
WHEREAS , Indemnitee does not regard the protection
available under the Bylaws and liability insurance as adequate in
the present circumstances, and may not be willing to serve as an
employee or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. 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:
TERMS AND
CONDITIONS
1. SERVICES TO THE
COMPANY . Indemnitee will
agree to serve or to continue to serve as an employee or director
of the Company for so long as Indemnitee is duly elected or
appointed or until Indemnitee tenders his resignation. Nothing
contained in this Agreement shall be construed as giving Indemnitee
any right to be retained in the employ of the Company or any of its
subsidiaries or affiliated entities.
2. DEFINITIONS . As used in this Agreement:
(a) References to
“agent” shall mean any individual who is or was a
director, officer, or employee of the Company or a Subsidiary of
the Company or other individual authorized by the Company to act
for the Company, to include such individual 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 (as defined
below) 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 fifteen percent (15%) 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 two thirds 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, immediately following such Business Combination:
(1) all or substantially all of the Persons 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 such 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 14A of Regulation 14A (or a
response to any similar item on any similar schedule or form)
promulgated under the Exchange Act, whether or not the Company is
then subject to such reporting requirement.
(d) “Corporate Status”
describes the status of an individual who is or was a director,
officer, trustee, general partner, managing member, fiduciary,
employee or agent of the Company or of any other Enterprise which
such individual is or was serving at the request of the
Company.
(e) “Oregon Court” shall
mean a Circuit Court of the State of Oregon.
(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 all direct and indirect costs, fees and expenses of any
type or nature whatsoever, including, without limitation, all
attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, fees of
private investigators and professional advisors, duplicating costs,
printing and binding costs, telephone charges, postage, delivery
service fees, fax transmission charges, secretarial services and
all other disbursements, obligations or expenses in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, settlement or
appeal of, or otherwise participating in, a Proceeding, including,
without limitation, reasonable compensation for time spent by the
Indemnitee for which he or she is not otherwise compensated by the
Company or any third party. Expenses also shall include Expenses
incurred in connection with any appeal resulting from any
Proceeding, including, without limitation, the principal, 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 with
significant experience 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 as “Independent
Counsel” under this Agreement or under similar
indemnification agreements); or (ii) any other party to the
Proceeding 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 Subsidiary of the Company; (iii) any
employment benefit plan of the Company or of a Subsidiary 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 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 is or
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 his Beneficial Ownership of such securities by five
percent (5%) or more over the percentage so owned by such
Person on the date hereof unless such acquisition was approved in
advance by the Board; 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, mediation, 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, will or might be involved as a party or
otherwise by reason of the fact that Indemnitee is or was a
director, officer, employee or agent 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, officer,
employee or agent 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.
(p) In connection with any merger or
consolidation, references to the “Company” shall
include not only the resulting or surviving company, but also any
constituent company or constituent of a constituent company, which,
if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or
agents. The intent of this provision is that a person who is or was
a director of such constituent company after the date hereof or is
or was serving at the request of such constituent company as a
director, officer, employee, trustee or agent of another company,
partnership, joint venture, trust, employee benefit plan or other
Enterprise after the date hereof, shall stand in the same position
under this Agreement with respect to the resulting or surviving
company as the person would have under this Agreement with respect
to such constituent company if its separate existence had
continued.
3. INDEMNITY IN THIRD-PARTY
PROCEEDINGS . The Company
shall indemnify, hold harmless and exonerate 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, held harmless and exonerated against all Expenses,
judgments, liabilities, fines, penalties and amounts paid in
settlement (including, without limitation, 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 or on his behalf 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, hold harmless
and exonerate 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, held harmless and exonerated against all Expenses
actually and reasonably incurred by him or on his behalf 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, hold harmless or exoneration
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 Oregon 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, to be held harmless or to
exoneration.
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,
hold harmless and exonerate 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, hold harmless and exonerate Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or
matter. If the Indemnitee is not wholly successful in such
Proceeding, the Company also shall indemnify, hold harmless and
exonerate Indemnitee against all Expenses reasonably incurred in
connection with a claim, issue or matter related to any claim,
issue, or matter on which the Indemnitee was successful. 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, held harmless and exonerated against all
Expenses actually and reasonably incurred by him or on his behalf
in connection therewith.
7. ADDITIONAL INDEMNIFICATION,
AND EXONERATION RIGHTS .
(a) Notwithstanding any limitation
in Sections 3, 4, or 5, the Company shall indemnify, hold harmless
and exonerate Indemnitee if 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)
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 in
connection with the Proceeding. No indemnification, hold harmless
or exoneration rights shall be available under this
Section 7(a) on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the
Company or its stockholders or is an act or omission not in good
faith or which involves intentional misconduct or a knowing
violation of the law. No indemnification, hold harmless or
exoneration rights shall be available under this Section 7(a)
on account of Indemnitee’s conduct which (a) constitutes
a breach of Indemnitee’s duty of loyalty to the Company or
its stockholders, (b) is an act or omission not in good faith
or which involves intentional misconduct or a knowing violation of
the law, (c) involves an unlawful distribution to shareholders
or (d) involves a transaction from which the Indemnitee
derived an improper personal benefit.
(b) Notwithstanding any limitation
in Sections 3, 4, 5 or 7(a), the Company shall indemnify, hold
harmless and exonerate Indemnitee if 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) 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 in
connection with the Proceeding.
8. CONTRIBUTION IN THE EVENT OF
JOINT LIABILITY .
(a) To the fullest extent
permissible under applicable law, if the indemnification, hold
harmless and/or exoneration rights provided for in this Agreement
are unavailable to Indemnitee, in whole or in part, for any reason
whatsoever, the Company, in lieu of indemnifying, holding harmless
or exonerating 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 to
fully indemnify, hold harmless and exonerate 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 indemnification, hold harmless or exoneration
payment:
(a) in connection with any claim
made against Indemnitee 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
