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Exhibit 10.1
INDEMNIFICATION AGREEMENT
UROQUEST MEDICAL CORPORATION
1. EFFECTIVE DATE: October ___, 1996
2. PARTIES: UroQuest Medical Corporation
000 Xxxx 000xx Xxxxx x/x XxxXxxxx Xxxxxxx Xxxxxxxxxxx
Xxxxx 000 265 East 000xx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000 Suite 220
(the "Company") Xxxx Xxxx Xxxx, XX 00000
(the "Indemnified Party")
3. RECITALS/AGREEMENT:
(a) At the request of the "Company", the Indemnified Party
currently serves as a director, officer or manager of the Company (as defined
below), or in a combination of these positions. As such, Indemnified Party may
be subjected to claims, suits or proceedings.
(b) The Company's By-laws and Section 145 of the Delaware General
Corporation Law contemplate that contracts may be made between the Company and
members of its Board of Directors, officers and employees with respect to
indemnification.
(c) In consideration of Indemnified Party's acceptance and
continuation of service as a director, officer or manager, or in a combination
of these positions, after the date of this Agreement, and in consideration of
the mutual covenants stated herein, the parties agree as follows.
4. DEFINITIONS: As used in this Agreement, the following terms have the
following meanings:
(a) Change in Control. A "Change in Control" shall be deemed to
have occurred if any of the following events occurs: (i) any "person" (as such
term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) becomes after the date hereof the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing 30% or more of the total number of votes that may be cast
for the election of directors of the Company (called in this definition "voting
securities"); (ii) at least 40% of the directors of the Company constitute
persons who were not, at the time of their first election to the Board of
Directors of the Company, candidates proposed by a majority of the Company's
Board of Directors in office prior to the time of such first election; (iii)
either stockholder approval of the dissolution of the Company or the actual
dissolution of the Company; (iv) a sale
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or other disposition, or the last sale or other disposition to occur in a
series of sales and/or other dispositions within any 12-month period ("Serial
Sales"), by the Company of assets which (at the time of the sale or disposition
or, in the case of Serial Sales, as of the beginning of such 12-month period)
account for more than 75% of the total assets or 40% of the revenues of the
Company, as determined in accordance with generally accepted accounting
principles; provided, however, that no sale or disposition of assets or stock
shall be taken into account to the extent that the proceeds of such sale or
disposition (whether in cash or in-kind) are reinvested in the Company or are,
in the case of proceeds received in-kind, used in the ongoing conduct of the
Company, provided further that such a reinvestment shall not be deemed to have
occurred unless made within 12 months of such sale or disposition and provided
further that, the term reinvestment shall include, among other things, the use
of proceeds to repay debt incurred in connection with the operation of the
business in which the assets sold or disposed of were used; (v) the
stockholders shall approve any merger, consolidation, or like business
combination or reorganization of the Company, the consummation of which would
result in the voting securities of the Company outstanding immediately prior
thereto representing (by remaining outstanding or being converted into
securities of the surviving entity or otherwise) less than 70% of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger, consolidation, business combination or reorganization; or
(vi) any other event which the Company's Board of Directors determines, in its
discretion, would materially alter the structure of the Company or its
ownership.
(b) Corporation Law. The term "Corporation Law" means the
Delaware General Corporation Law as it exists on the date of this Agreement and
as it may be hereafter amended from time to time. In the case of any amendment
of the Delaware General Corporation Law after the date of this Agreement, when
used in reference to an act or omission occurring prior to effectiveness of
such amendment (unless prohibited by law), the term "Corporation Law" shall
include such amendment only to the extent that the amendment permits the
Company to provide broader indemnification rights than the Delaware General
Corporation Law permitted the Company to provide prior to the amendment.
(c) Director, Officer or Manager. As used in reference to a
position held by Indemnified Party, the term "director," "officer" or "manager"
means a director, officer or manager (as designated by the person's title in
the case of a manager) of the Company and, while a director, officer or manager
of the Company, Indemnified Party's serving at the Company's request as a
director, officer, manager, partner, trustee, employee, agent or fiduciary of
any corporation, partnership, joint venture, trust, other enterprise or
employee benefit plan (including without limitation any service as a director,
officer, manager, employee, agent or fiduciary which imposes duties on, or
involves services by, such director, officer, manager, employee or agent with
respect to any employee benefit plan, its participants or beneficiaries). The
terms "director," "officer" and "manager" also include, unless the context
otherwise requires, the estate or personal representative of a director,
officer or manager. The terms "director" and "officer" shall also include any
such broader definition as may be provided in the Corporation Law with
amendments after the date of this Agreement.
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(d) Potential Change in Control. A "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 or entity (including the Company) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control, or (iii) the Board of Directors adopts a
resolution to the effect that, for purposes of this Agreement, a potential
Change in Control has occurred.
(e) Proceeding. The term "proceeding" means any threatened,
pending or completed action, suit or proceeding, or any inquiry or
investigation, whether civil, criminal, administrative or investigative, and
whether formal or informal.
(f) Reviewing Party. "Reviewing Party" means the person or body
determined in accordance with Section 9.
5. AGREEMENT TO INDEMNIFY: The Company shall indemnify, and keep
indemnified, Indemnified Party in accordance with, and to the full extent
permitted and/or required by, the Corporation Law and any other applicable law
from and against any expenses (including but not limited to attorneys' fees,
expenses of investigation and preparation, and fees and disbursements of
Indemnified Party's accountants or other experts), judgments, fines (including
but not limited to excise taxes assessed on a person with respect to an
employee benefit plan), penalties and amounts paid in settlement (including
without limitation all interest, assessments and other charges paid or payable
in connection with any of the foregoing) actually and reasonably incurred by
Indemnified Party in connection with any proceeding in which Indemnified Party
was or is made a party or was or is involved (for example, as a witness) by
reason of the fact that Indemnified Party is or was a director, officer or
manager of the Company.
6. D&O INSURANCE: So long as Indemnified Party may be subject to any
possible proceeding by reason of the fact that Indemnified Party is or was a
director or officer of the Company, to the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnified Party shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
applicable to any then current director or officer of the Company.
7. ADVANCES: In the event of any proceeding in which Indemnified Party
is a party or is involved and which may give rise to a right of indemnification
from the Company pursuant to this Agreement, following written request to the
Company by Indemnified Party, the Company shall pay to Indemnified Party, in
accordance with and to the full extent permitted and/or required by the
Corporation Law, amounts to cover reasonable expenses incurred by Indemnified
Party in such proceeding in advance of its final disposition upon receipt of
(a) a written undertaking executed by or on behalf of Indemnified Party to
repay the advance if it shall ultimately be determined that Indemnified Party
is not entitled to be indemnified by the Company and (b) satisfactory evidence
as to the amount of such expenses.
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8. BURDEN OF PROOF: If under applicable law, the entitlement of
Indemnified Party to be indemnified or advanced expenses hereunder depends upon
whether a standard of conduct has been met, the burden of proof of establishing
that Indemnified Party did not act in accordance with such standard shall rest
with the Company. Indemnified Party shall be presumed to have acted in
accordance with such standard and to be entitled to indemnification or the
advancement of expenses (as the case may be) unless, based upon a preponderance
of the evidence, it shall be determined that Indemnified Party has not met such
standard. For purposes of this Agreement, unless otherwise expressly stated,
the termination of any proceeding by judgment, order, settlement (whether with
or without court approval), conviction, or upon a plea of nolo contendere or
its equivalent, shall not create a presumption that Indemnified Party did not
meet any particular standard of conduct or have any particular belief.
9. DETERMINATION REGARDING STANDARD OF CONDUCT; REVIEWING PARTY: Any
determination as to whether Indemnified Party has met an applicable standard of
conduct for indemnification or advancement of expenses and any evaluation as to
the reasonableness of amounts claimed by Indemnified Party shall be made by the
Reviewing Party. If there has not been a Change of Control after the date of
this Agreement, the Reviewing Party shall be the Board of Directors of the
Company or such other body or persons appointed by the Board of Directors of
the Company as permitted by the Corporation Law. If there has been a Change of
Control after the date of this Agreement and if so requested by the Indemnified
Party, the Reviewing Party shall be an independent counsel who is selected by
the Indemnified Party and approved by the Company (which approval shall not be
unreasonably withheld). For this purpose, "independent counsel" means a law
firm or a member of a law firm that neither is at the time, nor in the past
five years has been, retained to represent (i) the Company or the Indemnified
Party in any matter material to either such party or (ii) any other party to
the Proceeding giving rise to a claim for indemnification under this Agreement.
Notwithstanding the foregoing, the term "independent counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing under the law of the State of Delaware, would have a conflict of
interest in representing either the Company or the Indemnified Party in an
action to determine the Indemnified Party's rights under this Agreement. The
Company agrees to pay the reasonable fees of the independent counsel referenced
above and to indemnify fully such independent counsel against any and all
expenses (including without limitation attorneys' fees), liabilities, losses
and damages arising out of or relating to this Agreement or its engagement
pursuant to this Agreement.
10. NOTICE TO THE COMPANY: Indemnified Party shall notify the Secretary
of the Company in writing of any matter for which Indemnified Party intends to
seek indemnification hereunder as soon as reasonably practicable following the
receipt by Indemnified Party of written notice thereof; provided, however, that
delay in so notifying the Company shall not constitute a waiver or release by
Indemnified Party of rights hereunder.
11. COUNSEL FOR PROCEEDING; SETTLEMENTS: In the event of any proceeding
in which Indemnified Party is a party or is involved and which may give rise to
a right of
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indemnification hereunder, the Company shall have the right to retain counsel,
satisfactory to Indemnified Party in his or her discretion, to represent
Indemnified Party and any others the Company may designate in such proceeding.
In any such proceeding, Indemnified Party shall have the right to retain
Indemnified Party's own counsel, but the fees and expenses of such counsel
shall be at the expense of Indemnified Party unless (a) the retention of such
counsel has been specifically authorized by the Company; (b) representation of
Indemnified Party and another party by the same counsel would be inappropriate,
in the reasonable judgment of Indemnified Party, due to actual or potential
differing interests between them; (c) the counsel retained by the Company and
satisfactory to Indemnified Party has advised Indemnified Party, in writing,
that such counsel's representation of Indemnified Party would be likely to
involve such counsel in representing differing interests which could adversely
affect either the judgment or loyalty of such counsel to Indemnified Party,
whether it be a conflicting, inconsistent, diverse or other interest; or (d)
the Company shall fail to retain counsel for Indemnified Party in such
proceeding. Notwithstanding the foregoing, if an insurance carrier has
supplied directors' and officers' liability insurance covering a proceeding and
is entitled to retain counsel for the defense of such proceeding, then the
insurance carrier shall retain counsel to conduct the defense of such
proceeding unless Indemnified Party and the Company concur in writing that the
insurance carrier's doing so is undesirable. The Company shall not be liable
under this Agreement for any settlement of any proceeding effected without its
written consent. The Company shall not settle any proceeding in any manner
which would impose any penalty or limitation on Indemnified Party without
Indemnified Party's written consent. Consent to a proposed settlement of any
proceeding shall not be unreasonably withheld by either the Company or
Indemnified Party.
12. ENFORCEMENT; ACTION TO DETERMINE COMPLIANCE WITH STANDARD OF CONDUCT:
The Company acknowledges that Indemnified Party is relying upon this Agreement
in serving as a director, officer or manager of the Company. If a claim for
indemnification or advancement of expenses is not paid in full by the Company
within sixty days, or within twenty days in the case of a claim for advancement
of expenses, after a written claim has been received from Indemnified Party by
the Company, Indemnified Party may at any time bring a legal action against the
Company to recover the unpaid amount of the claim. Indemnified Party shall
also be entitled to be paid by the Company all reasonable fees and expenses
(including without limitation fees of counsel) in bringing and prosecuting such
claim, unless as a part of the legal action concerning such claim the court
having jurisdiction over the action determines that each of the material
assertions made by Indemnified Party as a basis for the action was not made in
good faith or was frivolous. Neither the failure of the Reviewing Party or the
Company (including its Board of Directors, independent counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the Indemnified Party is proper in the
circumstances nor an actual determination by the Reviewing Party or the Company
(including its Board of Directors, independent legal counsel, or its
stockholders) that the Indemnified Party is not entitled to indemnification
shall be a defense to the action, be admissible as evidence, or create a
presumption that the Indemnified Party is not so entitled. Any such action
shall be de novo, and the Indemnified Party shall not be prejudiced by reason
of any such adverse determination. If an action is brought pursuant to this
Section, a final nonappealable
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order in such action shall constitute the ultimate determination of the
Indemnified Party's right to indemnification. Whether or not Indemnified Party
has met any applicable standard of conduct, the Court in such suit may order
indemnification or the advancement of expenses as the Court deems proper
(subject to any express limitation of the Corporation Law). Further, the
Company shall indemnify Indemnified Party from and against any and all expenses
(including without limitation attorneys' fees) and, if requested by Indemnified
Party, shall (within twenty days of such request) advance such expenses to
Indemnified Party, which are incurred by Indemnified Party in connection with
any claim asserted against or legal action brought by Indemnified Party for
recovery under any directors' and officers' liability insurance policies
maintained by the Company, regardless of whether Indemnified Party is
unsuccessful in whole or in part in such claim or suit.
13. PROCEEDINGS BY INDEMNIFIED PARTY: Notwithstanding other provisions of
this Agreement to the contrary, prior to a Change in Control, the Company shall
not indemnify Indemnified Party and advance expenses to Indemnified Party in
connection with any proceeding (or part thereof) initiated by Indemnified Party
against the Company or any director, officer or manager of the Company unless
such proceeding (or part thereof) was authorized by the Board of Directors of
the Company.
14. ESTABLISHMENT OF TRUST: In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnified Party, create a
trust for the benefit of Indemnified Party (and possibly others as described
below) and from time to time upon written request of Indemnified Party shall
fund such trust in an amount sufficient to satisfy any and all expenses and
other amounts for which indemnification may be sought under this Agreement and
which at the time of each such request are reasonably anticipated to be
incurred, are proposed to be paid by Indemnified Party, have actually been paid
by Indemnified Party or have actually been claimed in a proceeding. The amount
or amounts to be deposited in the trust pursuant to the foregoing funding
obligation shall be determined by mutual agreement of the Company and
Indemnified Party or, if they are unable to reach such mutual agreement within
ten days after any such request by Indemnified Party for funding, by a
Reviewing Party who is selected in accordance with Section 9 of this Agreement
as if a Change of Control had occurred. In determining any such amounts, the
parties or the Reviewing Party (as the case may be) shall take into account the
availability of any amounts under any directors' and officers' liability
insurance. At the Company's discretion, the trust created by the Company at
the request of the Indemnified Party pursuant to the foregoing obligation may
also be for the benefit of other existing or former officers, directors or
employees of the Company with respect to indemnification and advancement of
expenses, and may be a trust previously created and existing at the time for
the benefit of any such persons. If and to the extent authorized by the
parties or Reviewing Party, as the case may be, when determining the amounts to
be deposited in the trust, the trust may commingle and combine into one or more
funds amounts held for Indemnified Person and such other persons. The terms of
the trust shall provide that upon a Change in Control (i) the trust shall not
be revoked or the principal thereof invaded, without the written consent of
Indemnified Party, (ii) the trustee shall advance within twenty days of a
request by Indemnified Party, any and all expenses to
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Indemnified Party (and Indemnified Party hereby agrees to reimburse the trust
under the circumstances under which Indemnified Party would be required to
reimburse the Company under Section 7 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 pay promptly (but in any event within
sixty days after a written claim for indemnification) to Indemnified Party all
amounts for which the Indemnified Party is entitled to indemnification pursuant
to this Agreement; 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 Indemnified Party has been
fully indemnified under the terms of this Agreement. The trustee shall be an
individual or entity chosen by Indemnified Party and approved by the Company
(whose approval shall not be unreasonably withheld). All income earned on the
assets held in the trust shall be reported as income by the Company for
federal, state, local and foreign tax purposes. The Company shall pay all
costs of establishing and maintaining the trust and shall indemnify the trustee
against any and all expenses (including without limitation attorneys' fees),
liabilities, losses and damages arising out of or relating to this Agreement or
the establishment and maintenance of the trust. Nothing in this Section 14
shall relieve the Company of any of its obligations under this Agreement.
15. NONEXCLUSIVITY: The rights of Indemnified Party for indemnification
and advancement of expenses under this Agreement shall not be deemed exclusive
of, or in limitation of, any rights to which Indemnified Party may be entitled
under Delaware law, the Company's Certificate of Incorporation or By-laws, vote
of shareholders or otherwise.
16. MISCELLANEOUS:
(a) Effectiveness. This Agreement is effective for, and shall
apply to, (i) any claim which is asserted or threatened before, on or after the
date of this Agreement but for which no action, suit or proceeding has actually
been brought prior to the date of this Agreement and (ii) any action, suit or
proceeding which is threatened before, on or after the date of this Agreement
but which is not pending prior to the date of this Agreement. Thus, this
Agreement shall not apply to any action, suit or proceeding which has actually
been brought before the date of this Agreement. So long as the foregoing
standard of effectiveness has been satisfied, this Agreement shall be effective
for and shall be applied to acts or omissions prior to, on or after the date of
this Agreement.
(b) Survival; Continuation. The rights of Indemnified Party
hereunder shall inure to the benefit of the Indemnified Party (even after
Indemnified Party ceases to be a director, officer or manager), Indemnified
Party's personal representative, heirs, executors, administrators and
beneficiaries; and this Agreement shall be binding upon the Company, its
successors and assigns. The rights of Indemnified Party under this Agreement
shall continue so long as Indemnified Party may be subject to any possible
proceeding because of the fact that Indemnified Party was a director, officer
or manager of the Company. If the Company sells, leases, exchanges or
otherwise disposes of, in a single transaction or series of related
transactions, all or substantially
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all of its property and assets, the Company shall, as a condition precedent to
such transaction, cause effective provision to be made so that the person or
entity acquiring such property and assets shall become bound by and replace the
Company under this Agreement.
(c) Partial Indemnification. If the Indemnified Party is entitled
to indemnification by the Company for some or a portion of expenses, judgments,
fines or settlement amounts actually incurred by the Indemnified Party in a
proceeding but not, however, for the total amount thereof, the Company shall
nevertheless indemnify the Indemnified Party for the portion of such expenses,
judgments, fines or settlement amounts to which the Indemnified Party is
entitled.
(d) No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any proceeding
against the Indemnified Party to the extent the Indemnified Party has otherwise
actually received payment (under any insurance policy, bylaw or otherwise) of
the amounts otherwise subject to indemnification under this Agreement.
(e) Governing Law. This Agreement shall be governed by the laws
of the State of Delaware, without regard to the conflict of laws principles
thereof.
(f) Severability. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such provision shall
be deemed amended to accomplish the objectives of the provision as originally
written to the full extent permitted by law and all other provisions shall
remain in full force and effect.
(g) Amendment. No amendment, termination or cancellation of this
Agreement shall be effective unless in writing signed by the Company and
Indemnified Party.
(h) 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 Indemnified Party, 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.
(i) Headings. The headings in this Agreement are for convenience
only and are not to be considered in construing this Agreement.
(j) Counterparts. This Agreement may be executed in counterparts,
both of which shall be deemed an original, and together shall constitute one
document.
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The parties have executed this Agreement as of the Effective Date
first above stated.
UROQUEST MEDICAL CORPORATION Indemnified Party
By:
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[Name]
Title:
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