EXHIBIT 10.40
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of September 1, 2004, between Xxxxxx
CDT Inc., a Delaware corporation (the "Company"), and Xxxxx Xxxxxxx (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract
as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment;
WHEREAS, the Amended and Restated Bylaws of the Company
require the Company to indemnify and advance expenses to its directors and
officers to the full extent permitted by law and the Indemnitee has been serving
and continues to serve as a director or officer of the Company in part in
reliance on such Bylaws;
WHEREAS, the Amended and Restated Bylaws of the Company and
the Delaware General Corporation Law each provide that the indemnification
provided herein shall not be exclusive;
WHEREAS, 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, 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, and, to the extent insurance is maintained,
for the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Company directly or, at its request, another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Certain Definitions:
(a) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or 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, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company
representing 20% or more of the total voting power represented
by the Company's then outstanding Voting Securities, or (ii)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving
entity) at least 80% 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
the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series
of transactions) all or substantially all the Company's
assets.
(b) Claim: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether
instituted 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.
(c) Expenses: include attorneys' fees and all other costs,
expenses and obligations paid or 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 Claim relating to any Indemnifiable
Event.
(d) Indemnifiable Event: any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or Xxxxxx Inc., or is or
was serving at the request of the Company or Xxxxxx Inc. as a
director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of
anything done or not done by Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3, who
shall not have otherwise performed services for the Company or
Indemnitee within the last five years (other than with respect
to matters concerning the rights of
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Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
(f) Potential Change in Control: shall be deemed to have occurred
if (i) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in
Control; (ii) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control;
(iii) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the
Company or 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, who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 9.5% or more of the
combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such
securities by five percentage points (5%) or more over the
percentage so owned by such person; or (iv) the Board adopts a
resolution to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.
(g) Reviewing Party: any appropriate person or body consisting of
a member or members of the Company's Board of Directors or any
other person or body appointed by the Board who is not a party
to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(h) Voting Securities: any securities of the Company which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(a) In the event 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 by reason
of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify Indemnitee to the fullest extent
permitted by law as soon as practicable but in any event no
later than thirty days after written demand is presented to
the Company, against any and 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 or amounts paid in settlement) arising from
or relating to such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such
request) any and all Expenses to Indemnitee (an "Expense
Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition
that the Reviewing Party
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shall not have determined (in a written opinion, in any case
in which the Independent Legal Counsel referred to in Section
3 hereof is involved) 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 2(a) shall be subject to the condition 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 shall 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 or thereafter
commences legal proceedings in a court of competent
jurisdiction 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 shall not be binding and
Indemnitee shall 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). If there has not
been a Change in Control, the Reviewing Party shall be
selected by the Board of Directors, and if there has been such
a Change in Control (other than a Change in Control which has
been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change
in Control), the Reviewing Party shall be the Independent
Legal Counsel referred to in Section 3 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 shall have the right to commence
litigation in any court in the State of Delaware having
subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or
any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of
process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
3. 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 a majority 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 or Company Bylaw now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render
its written opinion to the Company and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified under
applicable law. The
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Company agrees to pay the reasonable fees of the Independent Legal
Counsel referred to above and to indemnify fully such 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.
4. Establishment of Trust. In the event of a Potential Change in Control,
the Company shall, upon written request by Indemnitee, create a trust
for the benefit of Indemnitee and from time to time upon written
request of Indemnitee shall fund such trust in an amount sufficient to
satisfy any and all Expenses reasonably anticipated at the time of each
such request to be incurred in connection with investigating, preparing
for and defending any Claim relating to an Indemnifiable Event, and any
and all judgments, fines, penalties and settlement amounts of any and
all Claims relating to an Indemnifiable Event from time to time
actually paid or claimed, reasonably anticipated or proposed to be
paid. The amount or amounts to be deposited in the trust pursuant to
the foregoing funding obligation shall be determined by the Reviewing
Party, in any case in which the Independent Legal Counsel referred to
above is involved. The terms of the trust shall provide that (i) the
trust shall not be revoked or the principal thereof invaded, without
the written consent of the Indemnitee, (ii) the trustee shall advance,
within two business days of a request by the Indemnitee, any and all
Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the trust under the circumstances under which the Indemnitee
would be required to reimburse the Company under Section 2(b) of this
Agreement), (iii) the trust shall continue to be funded by the Company
in accordance with the funding obligation set forth above, (iv) the
trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such trust
shall revert to the Company upon a final determination by the Reviewing
Party or a court of competent jurisdiction, as the case may be, that
Indemnitee has been fully indemnified under the terms of this
Agreement. The trustee shall be chosen by Indemnitee. Nothing in this
Section 4 shall relieve the Company of any of its obligations under
this Agreement.
5. Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees)
and, if requested by Indemnitee, shall (within two business days of
such request) advance such expenses to Indemnitee, which are incurred
by Indemnitee in connection with any action brought by Indemnitee for
(i) indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or Company Bylaw now or hereafter
in effect relating to Claims for Indemnifiable Events and/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 such indemnification,
advance expense payment or insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a
portion of the
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Expenses, judgments, fines, penalties and amounts paid in settlement
arising from or relating to a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless 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 shall be indemnified
against all Expenses incurred in connection therewith.
7. Burden of Proof. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.
8. No Presumptions. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, 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 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 or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief.
9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's
Amended and Restated Bylaws or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General
Corporation Law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently
under the Company's Amended and Restated Bylaws and this Agreement, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.
10. Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the
coverage available for any Company director or officer.
11. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the
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expiration of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing
of a legal action within such two-year period; provided, however, that
if any shorter period of limitations is otherwise applicable to any
such cause of action such shorter period shall govern.
12. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
13. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
14. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as an officer or director of the Company or of any
other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable
in any respect, and the validity and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired and shall remain enforceable to the
fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this 1st day September 2004.
By /s/X. Xxxxx Xxxxxxxxxx
-----------------------------------
Name: X. Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer and
President
/s/Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
(Indemnitee)
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