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EXHIBIT 10.59
INDEMNIFICATION AGREEMENT
This Indemnification Agreement, dated as of January 1, 1996, is made by and
between JALATE, Ltd., a California corporation (the "Company"), and Xxxxxxx X.
Xxxxx, a director of the Company (the "Indemnitee").
RECITALS
A. The Company and the Indemnitee recognize that the present state of the law is
too uncertain to provide the Company's officers and directors with adequate and
reliable advance knowledge or guidance with respect to the legal risks and
potential liabilities to which they may become personally exposed as a result of
performing their duties for the Company;
B. The Company and the Indemnitee are aware of the substantial growth in the
number of lawsuits filed against corporate officers and directors in connection
with their activities in such capacities and by reason of their status as such;
C. The Company and the Indemnitee recognize that the cost of defending against
such lawsuits, whether or meritorious, is typically beyond the financial
resources of most officers and directors of the Company;
D. The Company and the Indemnitee recognize that the legal risks and potential
liabilities, and the threat thereof, associated with proceedings filed against
the officers and directors of the Company bear no reasonable relationship to the
amount of compensation received by the Company's officers and directors;
E. The Company, after reasonable investigation prior to the date hereof, has
determined that the liability insurance coverage available to the Company as of
the date hereof is inadequate, unreasonable expensive or both. The Company
believes, therefore, that the interest of the Company's shareholders would be
best served by a combination of (I) such insurance as the Company may obtain
pursuant to the Company's obligations hereunder and (ii) a contract with its
officers and directors, including the Indemnitee, to indemnify them to the
fullest extent permitted by law (as in effect on the date hereof, or, to the
extent any amendment may expand such permitted indemnification, as hereafter in
effect) against personal liability for actions taken in the performance of their
duties to the Company;
F. Section 317 of the California General Corporation Law empowers California
corporations to indemnify their officers and directors and further states that
the indemnification provided by Section 317 "shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office, to the extent such additional rights to
indemnification are authorized in the articles of the corporation"; thus,
Section 317 does not by itself limit the extent to which the Company may
indemnify persons serving as its officers and directors;
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G. The Company's Articles of Incorporation and Bylaws authorize the
indemnification of the officers and directors of the Company in excess of that
expressly permitted by Section 317, subject to the limitations set forth in
Section 204 (a) (11) of the California General Corporation Law, or limitations
set forth in a statute, regulation or rule promulgated by any state or federal
regulatory agency with jurisdiction over the Company's activities;
H. The Board of Directors of the Company has concluded that, to retain and
attract talented and experienced individuals to serve as officers and directors
of the Company and to encourage such individuals to take the business risks
necessary for the success of the Company, it is necessary for the Company to
contractually indemnify its officers and directors, and to assume for itself
liability for expenses and damages in connection with claims against such
officers and directors in connection with their service to the Company, and has
further concluded that the failure to provide such contractual indemnification
could result in great harm to the Company and its shareholders;
I. The Company desires and has requested the Indemnitee to serve or continue to
serve as a director or officer of the Company, free from undue concern for the
risks and potential liabilities associated with such services to the Company;
and
J. The indemnitee is willing to serve, or continue to serve, the Company,
provided, and on the expressed condition, that he is furnished with the
indemnification provided for herein.
AGREEMENT
NOW, THEREFORE, the Company and indemnitee agree as follows:
1. DEFINITIONS.
(a) "Expenses" means, for the purposes of this Agreement, all direct and
indirect costs of any type or nature whatsoever (including, without limitation,
any fees and disbursements of Indemnitee's counsel, accountants and other
experts and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with the investigation, preparation, defense or appeal
of a Proceeding; provided, however, that Expenses shall not include judgments,
fines, penalties or amounts paid in settlement of a Proceeding.
(b) "Proceeding" means, for the purposes of this Agreement, any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative (including an action brought by or in the right
of the Company) in which Indemnitee may be or may have been involved as a party
or otherwise, by reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any action taken by him or of any inaction
on his part, whether before or after the date hereof, while acting as such
director or officer or by reason of the fact that he is or was serving at the
request of the Company as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director or officer of the foreign or domestic corporation
which was a predecessor corporation to the Company or of another enterprise at
the request of such predecessor corporation, whether or not he is serving in
such capacity at the time any liability or expense is incurred for which
indemnification or reimbursement can be provided under this Agreement.
2. AGREEMENT TO SERVE. Indemnitee agrees to serve or continue to serve as a
director or officer of the Company to the best of his abilities at the will of
the Company or under separate contract, if such contract exists, for so long as
Indemnitee is duly elected or appointed and qualified or until such time as he
tenders his
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resignation in writing. Nothing contained in this Agreement is intended to
create in Indemnitee any right to continued employment.
3. INDEMNIFICATION
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee
against Expenses, judgments, fines, penalties or amounts paid in settlement (if
the settlement is approved in advance by the Company) actually and reasonably
incurred by Indemnitee in connection with a Proceeding (other than a Proceeding
by or in the right of the Company) if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any Proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in the best interests of the Company, or, with respect
to any criminal Proceeding, had no reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent
permitted by law, the Company shall indemnify Indemnitee against Expenses and
amounts paid in settlement, actually and reasonably incurred by Indemnitee in
connection with a Proceeding by or in the right of the Company to procure a
judgment in its favor in Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the company and
its shareholders. Notwithstanding the foregoing, no indemnification shall be
made in respect of any claim, issue or matter as to which Indemnitee shall have
been adjudged liable to the Company in the performance of Indemnitee's duty to
the Company and its shareholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemniy for expenses and then only to the
extent that the court shall determine.
(c) SCOPE. Notwithstanding any other provision of this Agreement but
subject to Section 14(b), the Company shall indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by other provisions of this Agreement, the Company's
restated Articles of Incorporation, the Company's Bylaws or by statute.
4. LIMITATIONS ON INDEMNIFICATION. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) EXCLUDED ACTS. To indemnify Indemnitee for any acts or omissions or
transactions from which a director may not be relieved of liability under
section 204 of the California General Corporation Law;
(b) EXCLUDED INDEMNIFICATION PAYMENTS. To indemnify or advance Expenses in
violation of any prohibition or limitation on indemnification under the
statutes, regulations or rules promulgated by any state or federal regulatory
agency having jurisdiction over the Company.
(c) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance Expenses to
Indemnitee with respect to Proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California General Corporation Law, but such indemnification
or advancement of Expenses may be provided by the Company in specific cases if
the Board of Directors has approved the initiation or bringing of such suit;
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(d) LACK OF GOOD FAITH. To indemnify Indemnitee for any Expenses incurred
by the Indemnitee with respect to any proceeding instituted by Indemnitee to
enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee in such
proceeding was not made in good faith or was frivolous;
(e) INSURED CLAIMS. To indemnify Indemnitee for Expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to or on behalf of Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Company or any
other policy of insurance maintained by the Company or Indemnitee;
(f) CLAIMS UNDER SECTION 16(B). To Indemnify Indemnitee for Expenses and
the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities and Exchange Act of
1934, as amended, or any similar successor statute.
5. DETERMINATION OF RIGHT TO INDEMNIFICATION.
Upon receipt of a written claim addressed to the Board of Directors for
indemnification pursuant to Section 3, the Company shall determine by any of the
methods set forth in Section 317(e) of the California General Corporation Law
whether Indemnitee has met the applicable standards of conduct which makes it
permissible under applicable law to indemnify Indemnitee. If a claim under
Section 3 is not paid in full by the Company within ninety (90) days after such
written claim has been received by the Company, the Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim and, unless such action is dismissed by the court as frivolous or brought
in bad faith, the Indemnitee shall be entitled to be paid also the expense of
prosecuting such claim. The court in which such action is brought shall
determine whether Indemnitee has or has not met the applicable standard of
conduct.
6. ADVANCEMENT AND REPAYMENT OF EXPENSES.
Subject to Section 4 hereof, the Expenses incurred by Indemnitee in
defending and investigating any Proceeding shall be paid by the Company in
advance of the final disposition of such Proceeding within 30 days after
receiving from Indemnitee the copies of invoices presented to Indemnitee for
such Expenses, if Indemnitee shall provide an undertaking to the Company to
repay such amount to the extent it is ultimately determined that Indemnitee is
not entitled to indemnification. In determining whether or not to make an
advance thereunder, the ability of Indemnitee to repay shall not be a factor.
Notwithstanding the foregoing, in a proceeding brought by the Company directly,
in its own right ( as distinguished from an action brought derivatively or by
any receiver or trustee), the Company shall not be required to make the advances
called for hereby if the Board of Directors determines, in its sole discretion,
that it does not appear that Indemnitee has met the standards of conduct which
make it permissible under applicable law to indemnify Indemnitee and the
advancement of Expenses would not be in the best interests of the company and
its shareholders.
7. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any provision of
this Agreement to indemnification or advancement by the Company of some or a
portion of any Expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, penalties, and amounts paid in settlement)
incurred by him in the investigation, defense, settlement or appeal of a
Proceeding, but is not entitled to indemnification or advancement of the total
amount thereof, the Company shall nevertheless indemnify or pay advancements to
the Indemnitee for the portion of such Expenses or liabilities to which the
Indemnitee is entitled.
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8. NOTICE TO COMPANY BY INDEMNITEE. Indemnitee shall notify the Company in
writing of any matter with respect to which Indemnitee intends to seek
indemnification hereunder as soon as reasonably practicable following the
receipt by Indemnitee of written notice thereof; provided, however, that any
delay in so notifying the Company shall not constitute a waiver by Indemnitee of
his rights hereunder. The written notification to the Company shall be addressed
to the Board of Directors and shall include a description of the nature of the
Proceeding and the facts underlying the Proceeding and be accompanied by copies
of any documents filed with the court in which the proceeding is pending. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
9. MAINTENANCE OF LIABILITY INSURANCE.
(a) Subject to Section 4 hereof, the Company hereby agrees that so long as
Indemnitee shall continue to serve as a director or officer of the company and
thereafter so long as Indemnitee shall be subject to any possible Proceeding,
the Company, subject to Section 9(b), shall use its best efforts to obtain and
maintain in full force and effect directors' and officers' liability insurance
(`D&O Insurance") which provides Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company's directors, if Indemnitee
is a director; or of the Company's officers, if Indemnitee is not a director of
the Company but is an officer.
(b) Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain D&O Insurance if the Company determines in good faith that
such insurance is not reasonably available, the premium costs for such insurance
are disproportionate to the amount of coverage provided, the coverage provided
by such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.
(c) Notice to Insurers. If, at the time of the receipt of a notice of a
claim pursuant to Section 8 hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such Proceeding 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 the Indemnitee, all amounts payable as a
result of such Proceeding in accordance with the terms of such policies.
10. DEFENSE OF CLAIM. In the event that the Company shall be obligated under
Section 6 hereof to pay the Expenses of any Proceeding against Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of such
Proceeding, with counsel approved by Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written notice of its
election to do so. 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 of counsel
subsequently incurred by Indemnitee with respect to the same Proceeding,
provided that (i)Indemnitee shall have the right to employ his counsel in any
such Proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, or (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of such defense
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such Proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
11. ATTORNEYS' FEES. In the event that Indemnitee or the Company institutes an
action to enforce or interpret any terms of this Agreement, the Company shall
reimburse Indemnitee for all of the Indemnitee's reasonable fees and expenses in
bringing and pursuing such action or defense, unless as part of such action or
defense, a court of competent jurisdiction determines that the material
assertions made by Indemnitee as a basis for such action or defense were not
made in good faith or were frivolous.
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12. CONTINUATION OF OBLIGATIONS. All agreements and obligations of the Company
contained herein shall continue during the period the Indemnitee is a director
or officer of the Company, or is or was serving at the request of the Company as
a director, officer, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, and shall continue
thereafter so long as the Indemnitee shall be subject to any possible proceeding
by reason of the fact that Indemnitee served in any capacity referred to herein.
13. SUCCESSORS AND ASSIGNS. This Agreement establishes contract rights that
shall be binding upon, and shall incur to the benefit of, the successors,
assigns, heirs and legal representatives of the parties hereto.
14. NON-EXCLUSIVITY.
(a) The provisions for indemnification and advancement of expenses set
forth in this Agreement shall not be deemed to be exclusive of any other rights
that the Indemnitee may have under any provision of law, the company's Restated
Articles of Incorporation or Bylaws, the vote of the company's shareholders or
disinterested directors, other agreements or otherwise, both as to action in his
official capacity and action in another capacity while occupying his position as
a director or officer of the company.
(b) In the event of any changes, after the date of this Agreement, in any
applicable law, statute, or rule which expanse the right of a California
corporation to indemnify its officers and directors, the Indemnitee's rights and
the company's obligations under this Agreement shall be expended to the full
extent permitted by such changes. In the event of any changes in any applicable
law, statute or rule, which narrow the right of a California corporation to
indemnify a director or officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or parties' rights and obligations hereunder.
15. EFFECTIVENESS OF AGREEMENT. To the extent that the indemnification permitted
under the terms of certain provisions of this Agreement exceeds the scope of the
indemnification provided for in the California General Corporation Law, such
provisions shall not be effective unless and until the Company's Restated
Articles of Incorporation authorized such additional rights of indemnification.
In all other respects, the balance of this Agreement shall be effective as of
the date set forth on the first page and may apply to acts of omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, at the time such act or
omission occurred.
16. SEVERABILITY. Nothing in this Agreement is intended to require to shall be
construed as requiring the Company to do or fail to do any act in violation of
applicable law. The Company's inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 16. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
17. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California. To the extent permitted by
applicable law, the parties hereby waived any provisions of law which render any
provision of this Agreement unenforceable in any respect.
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18. NOTICE. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (I) if delivered by
hand and receipted by the party addressee or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement, or as subsequently modified by written notice.
19. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge that in
certain instances, federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the appropriate
state or federal regulatory agency to submit for approval any request for
indemnification, and has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
20. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
21. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year set forth above.
JALATE, LTD.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
By________________________
INDEMNITEE:
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