Exhibit 10.7
INDEMNIFICATION AGREEMENT - CONTROLLING STOCKHOLDERS
This INDEMNIFICATION AGREEMENT, dated as of September 26, 2003, is made
and entered into among Rubicon Medical Corporation, a Delaware corporation (the
"Company"), and Xxxxxx Family Enterprises, a Utah family limited partnership,
Xxxxx X. Xxxxxx, Xxxxxxx X. and Xxxxx X. Xxxxxx Family Limited Partnership, a
Utah family limited partnership, and Xxxxxxx X. Xxxxxx (each such person being
referred to herein individually as an "Indemnitee" and collectively as the
"Indemnitees").
RECITALS
A. Indemnitees own beneficially and of record shares (the "Owned
Shares") and options (the "Stock Options") to purchase shares (such Owned Shares
and Stock Options, collectively, the "Stockholder's Equity") of common stock,
par value $.001 per share ("Common Stock"), of the Company.
B. Boston Scientific Corporation ("Parent"), Nemo I Acquisition, Inc.
("Purchaser") and the Company desire to enter into a transaction agreement,
dated as of October 29, 2003 (the "Transaction Agreement"), providing that,
among other things, concurrently with the execution of the Transaction
Agreement, Parent or Purchaser shall purchase, and the Company shall issue to
Parent or Purchaser, shares of Series A Preferred Stock for $15 million in cash,
which shall be convertible into shares of Common Stock;
C. As a condition to the willingness of Parent and Purchaser to enter
into the Transaction Agreement, Parent and Purchaser have requested that
Indemnitees agree, and, in order to induce Parent and Purchaser to enter into
the Transaction Agreement, each Indemnitee has agreed, to enter into that
certain option agreement, dated as of October 29, 2003 (the "Option Agreement"),
with Parent and Purchaser pursuant to which each Indemnitee will (i) grant an
option to Parent and Purchaser to purchase the Stockholder's Equity payable in
cash (the "Purchase Option") and (ii) that Parent may require Indemnitees, in
lieu of selling their Stockholder's Equity to Parent or Purchaser as described
in clause (i), to tender their Owned Shares into the Offer (as defined in the
Transaction Agreement) in exchange for, at the option of Parent or Purchaser,
either cash or shares of common stock of Parent, par value $0.01 per share;
D. As a condition to the willingness of Indemnitees to enter into the
Option Agreement, Indemnitees have requested that the Company indemnify
Indemnitees in the manner provided herein, and, in order to induce Indemnitees
to enter into the Option Agreement, the Company agrees to provide Indemnitees
with the benefits contemplated by this Agreement.
AGREEMENTS
1. Indemnity of Indemnitee
1.1. Scope.
The Company shall indemnify and hold harmless each Indemnitee against any
Damages (as hereinafter below), joint or several, for which such Indemnitee may
become liable, insofar as such Damages (or actions in respect thereof) arise out
of or are based upon Indemnitee's breach or alleged breach of any duty owing or
alleged to be owing by Indemnitee, as controlling stockholder of the Company, to
the minority stockholders of the Company under or in connection with the Option
Agreement or the Transaction Agreement, the execution of such agreements or the
consummation of the transactions contemplated by such agreements.
1.2. Nonexclusivity.
The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which Indemnitees may otherwise be entitled as
directors and officers of the Company under the Company's Certificate of
Incorporation, the Bylaws, any agreement, any vote of stockholders or
disinterested directors, or otherwise.
1.3. Included Coverage - Damages.
If any Indemnitee was or is made a party, or is threatened to be made a
party, to or is otherwise involved (including, without limitation, as a witness)
in any Proceeding (as defined below), the Company shall hold harmless and
indemnify such Indemnitee from and against any and all losses, claims, damages,
liabilities or expenses, including, without limitation, attorneys' fees,
judgments, fines, witness fees, amounts paid in settlement and other expenses
incurred in connection with such Proceeding (collectively, "Damages").
1.4. Definition of Proceeding.
For purposes of this Agreement, "Proceeding" shall mean any completed,
actual, pending or threatened action, suit, claim or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) and whether formal or informal; provided, however, that,
except with respect to an action to enforce the provisions of this Agreement,
"Proceeding" shall not include any action, suit, claim or proceeding instituted
by or at the direction of any Indemnitee, unless such action, suit, claim or
proceeding is or was authorized by the Company's Board of Directors.
1.5. Contribution.
If the indemnification provided under Section 1.1 is unavailable by
reason of a court decision, then, in respect of any Proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
Proceeding), the Company shall contribute to the amount of Damages (including
attorneys' fees) actually and reasonably incurred and paid or payable by
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and Indemnitee on the other
from the transaction from which such Proceeding arose and (ii) the relative
fault of the Company on the one hand and of Indemnitee on the other in
connection with the events that resulted in such Damages as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of Indemnitee on the other shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such Damages.
The Company agrees that it would not be just and equitable if contribution
pursuant to this Section 1.5 were determined by pro rata allocation or any other
method of allocation that does not take account of the foregoing equitable
considerations.
1.6. Survival.
The indemnification and contribution provided under this Agreement
shall apply to any and all Proceedings, notwithstanding that Indemnitee has
ceased to be a controlling stockholder of the Company, and shall continue so
long as Indemnitee shall be subject to any possible Proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee entered into
the Option Agreement or consummated the transactions contemplated thereby as a
controlling stockholder of the Company.
2. Advancement of Expenses.
2.1. Generally.
The right to indemnification of Damages conferred by Section 1 shall
include the right to have the Company pay Indemnitees' expenses in any
Proceeding as such expenses are incurred and in advance of such Proceeding's
final disposition (such right, an "Expense Advance").
2.2. Conditions to Advancement of Expenses.
The Company's obligation to provide an Expense Advance is subject to
the following conditions:
2.2.1. Undertaking.
Each Indemnitee or such Indemnitee's representative shall have executed
and delivered to the Company an undertaking, which need not be secured and shall
be accepted without reference to such Indemnitee's financial ability to make
repayment, by or on behalf of Indemnitee, to repay all Expense Advances if it
shall ultimately be determined by a final, unappealable decision rendered by a
court having jurisdiction over the parties that Indemnitee is not entitled to be
indemnified by the Company.
2.2.2. Cooperation.
Each Indemnitee shall give the Company such information and cooperation
as it may reasonably request and as shall be within Indemnitee's power.
3. Enforcement Procedures.
3.1. Enforcement.
In the event that any claim for indemnity, whether an Expense Advance
or otherwise, is made hereunder and is not paid in full within 60 days after
written notice of such claim is delivered to the Company, any Indemnitee may,
but need not, thereafter bring suit against the Company to recover the unpaid
amount of the claim (an "Enforcement Action").
3.2. Presumptions in Enforcement Action.
In any Enforcement Action, the following presumption (and limitation on
presumptions) shall apply: the Company expressly affirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereunder
to induce Indemnitee to enter into the Option Agreement, which has in turn
induced Parent and Purchaser to enter into the Transaction Agreement.
3.3. Attorneys' Fees and Expenses for Enforcement Action.
In the event any Indemnitee is required to bring an Enforcement Action,
the Company shall pay all of such Indemnitee's fees and expenses in bringing and
pursuing the Enforcement Action (including attorneys' fees at any stage,
including on appeal); provided, however, that the Company shall not be required
to provide such payment for such attorneys' fees or expenses if a court of
competent jurisdiction determines that each of the material assertions made by
Indemnitee in such Enforcement Action was not made in good faith.
4. Notification and Defense of Claim.
4.1. Notification.
Promptly after receipt by any Indemnitee of notice of the commencement
of any Proceeding, such Indemnitee shall, if a claim in respect thereof is to be
made against the Company under this Agreement, notify the Company of the
commencement thereof; provided, however, the omission to so notify the Company
will not relieve the Company from any liability which it may have to such
Indemnitee under this Agreement unless and only to the extent that such omission
can be shown to have prejudiced the Company's ability to defend the Proceeding.
4.2. Defense of Claim.
With respect to any such Proceeding as to which an Indemnitee notifies
the Company of the commencement thereof:
(a) The Company may participate therein at its own expense;
(b) The Company, jointly with any other indemnifying party similarly
notified, may assume the defense thereof, with counsel satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election so to
assume the defense thereof, the Company shall not be liable to Indemnitee under
this Agreement for any legal or other expenses (other than reasonable costs of
investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (i) the employment of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of the defense of such action, or (iii) the Company shall not, in fact,
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the Company's expense. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which Indemnitee shall have reasonably made
the conclusion provided for in (ii) above;
(c) The Company shall not be liable to Indemnitee under this Agreement
for any amounts paid in settlement of any Proceeding effected without its
written consent;
(d) The Company shall not settle any action or claim in any manner that
would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent; and
(e) Neither the Company nor Indemnitee shall unreasonably withhold its
consent to any proposed settlement, provided that Indemnitee may withhold
consent to any settlement that does not provide a complete release of
Indemnitee.
5. Severability.
Nothing in this Agreement is intended to require or shall be construed
as requiring the Company to do or to 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 6, and if this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, the Company shall
nevertheless indemnify or make contribution to 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.
6. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of Delaware.
(b) This Agreement shall be binding on Indemnitees and on the Company
and its successors and assigns (including any transferee of all or substantially
all of its assets and any successor by merger or otherwise by operation of law),
and shall inure to the benefit of Indemnitees and Indemnitees' heirs, personal
representatives and assigns and to the benefit of the Company and its successors
and assigns. The Company shall not effect any sale of substantially all of its
assets, merger, consolidation or other reorganization in which it is not the
surviving entity, unless the surviving entity agrees in writing to assume all
such obligations of the Company under this Agreement.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
7. Notices.
All notices, claims and other communications hereunder shall be in
writing and made by hand delivery, registered or certified mail (postage
prepaid, return receipt requested), or by a commercially recognized means of
overnight delivery providing confirmation of receipt:
(a) If to the Company, to: with a copy to:
Rubicon Medical Corporation Xxxxxxx, Xxxxx & Xxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxxx Post Office Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, President Attention: Xxxx X. Xxxxxxxxx, Esq.
(b) If to Indemnitees, to the addresses specified for the Indemnitees
in the Option Agreements,
or to such other address as either party may from time to time furnish to the
other party by a notice given in accordance with the provisions of this Section
8. All such notices, claims and communications shall be deemed to have been duly
given if (i) personally delivered, at the time delivered, (ii) mailed, five days
after dispatched, and (iii) sent by any other means, upon receipt.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
The Company:
Rubicon Medical Corporation
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Title: President/CEO
Indemnitees:
Xxxxxx Family Enterprises
A Utah family limited partnership
By /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
Title: General Partner
Xxxxxxx X. and Xxxxx X. Xxxxxx Family
Limited Partnership
A Utah Family Limited Partnership
By /s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
Title: General Partner
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx, an individual
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx, an individual
