Indemnity Agmt. For Directors Of Franklin Tele.

Exhibit 10.12


Franklin Telecommunications Corp.
Indemnification Agreement


THIS INDEMNIFICATION AGREEMENT is entered into as of ___________ ____, 1997 between Franklin Telecommunications Corp. a California corporation ("the Company"), and ______________________________ ("Indemnitee").


RECITALS


A. The Company believes that it is essential to its best interests to attract and retain highly capable persons to serve as directors and officers of the Company.


B. Indemnitee is or has been selected to be a director and/or officer of the Company.


C. The Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors, officers, and other agents of corporations.


D. In recognition of Indemnitee's need for substantial protection against personal liability, in order to enhance Indemnitee's continued service to the Company, and in order to induce Indemnitee to continue to provide services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent permitted by law and as set forth in this Agreement and, to the extent applicable insurance is maintained, for the coverage of Indemnitee under the Company's policies of directors' and officers' liability insurance.


NOW THEREFORE, IN CONSIDERATION of the foregoing and of Indemnitee's continuing to provide services to the Company directly or, at its request, with another enterprise, the parties agree as follows:


1. DEFINITIONS. The following terms shall have the following meanings when used in this Agreement:


1.1 The term "Board" shall mean the board of directors of the Company.


1.2 The term "Change in Control" shall mean a state of affairs that shall be deemed to have occurred if :


(i) any person is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), directly or indirectly, of securities representing 20 percent or more of the total voting power of the Company's then-outstanding voting securities;


(ii) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the board, together with any new director whose election by the board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then in office who either were directors at the beginning of the two- year period, or whose election or nomination was previously so approved, cease for any reason to constitute a majority of the board;


(iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or a consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80 percent of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or


(iv) the shareholders of the Company approve a plan of complete liquidation of the Company, or an agreement for the sale or disposition by the Company (whether in one transaction or a series of transactions), of all or substantially all of the Company's assets.


1.3 The term "Expenses" shall mean:


(i) any expense, liability, or loss, including attorney fees, judgments, fines, ERISA excise taxes and penalties, and amounts paid or to be paid in settlement;


(ii) any interest, assessments, or other charges imposed on any of the items in part (i) of this subsection 1.3; and


(iii) any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in any proceeding relating


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to any Indemnifiable Event.


1.4 The term "Indemnifiable Event" shall mean any event or occurrence that takes place either before or after the execution of this Agreement and that is related to:


(i) the fact that Indemnitee is or was a director or an officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or another enterprise at the request of such predecessor corporation; or


(ii) anything done or not done by Indemnitee in any such capacity, whether or not the basis of the proceeding is an alleged action in an official capacity as a director, officer, employee, or agent, or in any other capacity while serving as a director, officer, employee, or agent of the Company, as described in this subsection 1.4.


1.5 The term "Independent Counsel" shall mean the person or firm appointed in connection with Section 3 of this Agreement


1.6 The term "Person" shall mean any person (as that term is used in sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity, or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company at the date of this Agreement.


1.7 The term "Participant" shall mean a person who is a party to, or a witness or a participant (including on appeal) in, a Proceeding.


1.8 The term "Potential Change in Control" shall mean a state of affairs that shall be deemed to exist 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 (including the Company) announces publicly an


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intention to take or to consider taking actions that, 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 10 percent or more of the combined voting power of the Company's then-outstanding voting securities, increases his or her beneficial ownership of such securities by 5 percent or more over the percentage owned by such person on the date of this Agreement; or


(iv) the board adopts a resolution to the effect that, for purposes of this Agreement, a potential change in control has occurred.


1.9 The term "Proceeding" shall mean any threatened, pending, or completed action, suit, or proceeding, or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.


1.10 The term "Reviewing Party" shall mean the person or firm appointed in accordance with Section 3 of this Agreement.


1.11 The term "Voting Securities" shall mean any securities of the Company that have the right to vote generally in the election of directors.


2. AGREEMENT TO INDEMNIFY.


2.1 General Agreement. In the event Indemnitee was, is, or becomes a participant in, or is threatened to be made a participant in, a proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company's articles of incorporation, its bylaws, a vote of its shareholders or disinterested directors, or applicable law.


2.2 Initiation of Proceeding. Notwithstanding anything in this Agreement to


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the contrary, Indemnitee shall not be entitled to indemnification ...