EXHIBIT 10.4
INDEMNIFICATION AND HOLD HARMLESS AGREEMENT
THIS INDEMNIFICATION AND HOLD HARMLESS AGREEMENT is dated as of
___________________, 1999, by PROVANTAGE HEALTH SERVICES, INC., a Delaware
corporation ("ProVantage"), and SHOPKO STORES, INC., a Wisconsin corporation
("ShopKo").
WHEREAS, ProVantage is currently an indirect, wholly-owned subsidiary of
ShopKo and the parties anticipate that ProVantage's common stock may be issued
in an initial public offering (the "IPO"); and
WHEREAS, ProVantage and ShopKo desire to enter into an agreement relating
to the indemnification against certain liabilities that each party hereto shall
extend to the other party hereto from and after the date the IPO is completed
(the "IPO Date").
NOW, THEREFORE, the parties hereto agree as follows:
1. Effectiveness. This Agreement shall become effective on and only as of
the IPO Date.
2. Definitions. As used in this Agreement, the following terms shall have
the indicated meanings.
Action: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such specified person; provided, however, that
for purposes of this Agreement (i) Affiliates of ProVantage shall not be deemed
to include ShopKo or any of its direct or indirect subsidiaries other than
ProVantage and any of ProVantage's subsidiaries, and (ii) Affiliates of ShopKo
shall not be deemed to include ProVantage or any of its direct or indirect
subsidiaries.
Code: the Internal Revenue Code of 1986, as amended.
Environmental Law: any federal, state or local law (including common law),
statute, ordinance, regulation, rule, policy, order (judicial or
administrative), decree judgment, decision, ruling, permit or authorization
(each as may be in effect from time to time) relating or applicable to
pollution, human health or safety associated with the environment, or the
environment, including, without limitation, any of the foregoing relating or
applicable to emissions, discharges, spills, releases or threatened releases of,
or human exposure to, Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Materials of Environmental Concern.
Environmental Liability: any liability or obligation (including, without
limitation, liability for investigatory costs, oversight costs, cleanup costs,
governmental or private response costs, natural resource damages, property
damages, personal injuries, consequential economic damages, civil or criminal
penalties or forfeitures, and attorneys' fees or other costs of defending a
claim of Environmental Liability) under any Environmental Law.
Exchange Act: the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification authorized pursuant to this Agreement, any and all losses,
liabilities, claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all Actions,
demands, claims, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and expenses in connection therewith)
suffered by such Indemnitee with respect to such claim except as may arise in
connection with the performance of the Administrative Services Agreement, the
Registration Rights Agreement, the Lease Agreement, the Credit Agreement, the
Tax Matters Agreement, and the Information Technology Services Agreement , each
of which has been or will be entered into by ShopKo (or one of its subsidiaries)
and ProVantage which shall, in each such case, be governed by the terms of such
agreement.
Indemnifying Party: any party who is required to pay any other person
pursuant to Sections 3 and 4 hereof.
Indemnitee: any party who is entitled to receive payment from an
Indemnifying Party pursuant to Sections 3 and 4 hereof.
Indemnity Payment: the amount an Indemnifying Party is required to pay an
Indemnitee pursuant to Sections 3 and 4 hereof.
Material of Environmental Concern: (i) any substance, the presence of which
requires investigation or remediation under any Environmental Law or under
common law; (ii) any dangerous, toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
substance which is regulated by any Environmental Law; (iii) any substance, the
presence of which causes or threatens to cause a nuisance upon the property
where it is located, or to adjacent properties or poses or threatens to pose a
hazard to the health or safety of persons on or about the property where it is
located; and (iv) urea-formaldehyde, polychlorinated biphenyls, asbestos or
asbestos-containing materials, petroleum and petroleum products.
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Preliminary Prospectus: the meaning ascribed to such term in that certain
Underwriting Agreement, dated ______________________, (the "Underwriting
Agreement") between ProVantage and the representatives of the several
underwriters named in Schedule I thereto.
Prospectus: the meaning ascribed to such term in the Underwriting
Agreement.
Registration Statement: the meaning ascribed to such term in the
Underwriting Agreement.
Securities Act: the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
3. Indemnification.
(a) ProVantage shall indemnify, defend and hold harmless ShopKo and its
Affiliates and each of their respective directors, officers, employees and
agents from and against any and all Indemnifiable Losses arising out of or based
upon, directly or indirectly, the operation of the business of ProVantage or any
of its Affiliates (except for those operations under the day to day direction of
ShopKo or its Affiliates) whether before or after the IPO Date. Without limiting
the generality of the foregoing sentence, ProVantage shall indemnify, defend and
hold harmless ShopKo and its Affiliates and each of their respective directors,
officers, employees and agents from and against any and all Indemnifiable
Losses:
(i) arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or any other filing made by ProVantage or any of its
Affiliates under the Securities Act or the Exchange Act, or arising out of
or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that ProVantage shall not be
liable in any such case to the extent that any such Indemnifiable Loss
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement, or any such other filing made by ProVantage or any
of its Affiliates under the Securities Act or the Exchange Act, in reliance
upon and in conformity with written information regarding ShopKo or any of
its Affiliates furnished to ProVantage or any of its Affiliates by ShopKo
or any of its Affiliates expressly for use therein;
(ii) arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any filing made by ShopKo
or any of its Affiliates under the Securities Act or the Exchange Act, or
arising out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any such filing made by ShopKo or
such Affiliate under the Securities Act or the Exchange Act, in reliance
upon and in conformity with written
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information regarding ProVantage or any of its Affiliates furnished to
ShopKo or any of its Affiliates by ProVantage or any of its Affiliates
expressly for use therein;
(iii) arising out of or based upon any Environmental Liability which
is alleged to be, or which is, directly or indirectly, caused by, related
to or a result of, the operation of the business of ProVantage or any of
its Affiliates or the ownership of property by ProVantage or any of its
Affiliates; or
(iv) arising out of or based upon any agreement to which ProVantage
or any of its Affiliates is a party or relating to the operation of the
business of ProVantage or any of its Affiliates, including, without
limitation, any requirement that ShopKo or any of its Affiliates make any
payments pursuant to the terms of such agreements or any requirement that
ShopKo or any of its Affiliates guarantee the performance by ProVantage or
any of its Affiliates of any of their obligations thereunder.
(b) ShopKo shall indemnify, defend and hold harmless ProVantage and its
Affiliates and each of their respective directors, officers, employees and
agents from and against any and all Indemnifiable Losses arising out of or based
upon, directly or indirectly, the operation of the business of ShopKo or any of
its Affiliates (except for those operations under the day to day direction of
ProVantage or its Affiliates, and not related in any way to, the operations of
ProVantage or any of its Affiliates which are not under the day to day direction
of ShopKo or its Affiliates) whether before or after the IPO Date. Without
limiting the generality of the foregoing sentence, ShopKo shall indemnify,
defend and hold harmless ProVantage and its Affiliates and each of their
respective directors, officers, employees and agents from and against any and
all Indemnifiable Losses:
(i) arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any filing made by ShopKo
or any of its Affiliates under the Securities Act or the Exchange Act, or
arising out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, however, that ShopKo shall
not be liable in any such case to the extent that any such Indemnifiable
Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such filing made by
ShopKo or any of its Affiliates under the Securities Act or the Exchange
Act, in reliance upon and in conformity with written information regarding
ProVantage or any of its Affiliates furnished to ShopKo or any of its
Affiliates by ProVantage or any of its Affiliates expressly for use
therein; or
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(ii) arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or any other filing made by ProVantage or any of its
Affiliates under the Securities Act or the Exchange Act, or arising out of
or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement, or any
such other filing made by ProVantage or any of its Affiliates under the
Securities Act or the Exchange Act, in reliance upon and in conformity with
written information regarding ShopKo or any of its Affiliates (but not
related in any way to ProVantage or its Affiliates), furnished to
ProVantage or any of its Affiliates by ShopKo or any of its Affiliates
expressly for use therein;
(iii) arising out of or based upon any agreement to which ShopKo or
any of its Affiliates is a party or relating to the operation of the
business of ShopKo or any of its Affiliates, including, without limitation,
any requirement that ProVantage or any of its Affiliates make any payments
pursuant to the terms of such agreements or any requirement that ProVantage
or any of its affiliates guarantee the performance by ShopKo or any of its
Affiliates of any of their obligations thereunder;
(iv) arising out of or based upon any Environmental Liability which
is alleged to be, or which is, directly or indirectly, caused by, related
to or a result of, the operation of the business of ShopKo or any of its
Affiliates (other than, and not related in any way to, the business of
ProVantage or any of its Affiliates) or the ownership of property by ShopKo
or any of its Affiliates (other than, and not related in any way to,
property owned by ProVantage or any of its Affiliates); or
(v) arising out of or based upon any currently existing written
agreement between ProVMed, LLC ("ProVMed") and ThinkMed LLC ("ThinkMed")
entered into in conjunction with ProVMed's May, 1997 equity investment in
ThinkMed.
4. Procedure for Indemnification.
(a) If an Indemnitee shall receive notice of the assertion by a person who
is not a party to this Agreement of any claim or of the commencement by any such
person of any Action (a "Third Party Claim") with respect to which an
Indemnifying Party is or may be obligated to make an Indemnity Payment, such
Indemnitee shall give such Indemnifying Party prompt notice thereof after
becoming aware of such Third Party Claim, specifying in reasonable detail the
nature of such Third Party Claim and the amount or estimated amount thereof to
the extent then feasible (which estimate shall not be conclusive of the final
amount of such claim); provided, however, that the failure of any Indemnitee to
give notice as provided in this Section 4 shall not relieve the related
Indemnifying Party of its obligations under this Agreement, except to the extent
that such Indemnifying Party is actually prejudiced by such failure to give
notice.
(b) An Indemnifying Party may elect to defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, any Third
Party Claim. If an Indemnifying Party elects to defend a Third Party Claim, it
shall, within 10 days of notice of such Third Party Claim (or sooner, if the
nature of such Third Party Claim so requires), notify the related Indemnitee of
its intent to do so, and such Indemnitee shall cooperate in the defense of such
Third Party Claim. Such Indemnifying Party shall pay such Indemnitee's actual
out-of-
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pocket expenses (other than officers' or employees' salaries) reasonably
incurred in connection with such cooperation as such expenses are incurred.
After notice from an Indemnifying Party to an Indemnitee of its election to
assume the defense of a Third Party Claim, such Indemnifying Party shall not be
liable to such Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof;
provided, however, that such Indemnitee shall have the right to employ separate
counsel to represent such Indemnitee if, in such Indemnitee's reasonable
judgment, a conflict of interest between such Indemnitee and such Indemnifying
Party exists in respect of such claim, and in that event the reasonable fees and
expenses of such separate counsel shall be paid by such Indemnifying Party as
such fees and expenses are incurred. Except as so provided, if an Indemnitee
desires to participate in the defense of a Third Party Claim, it may do so but
it shall not control the defense and such participation shall be at its sole
cost and expense. If an Indemnifying Party elects not to defend against a Third
Party Claim, or fails to notify an Indemnitee of its election as provided in
this Section 4, such Indemnitee may defend, compromise and settle such Third
Party Claim; provided, however, that no such Indemnitee may compromise or settle
any such Third Party Claim without prior written notice to such Indemnifying
Party and except by payment of monetary damages or other money payments. No
Indemnifying Party shall consent to entry of any judgment or enter into any
compromise or settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such Third Party Claim.
(c) If any Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to such Indemnifying Party any personnel or any books,
records or other documents within its control that are necessary or appropriate
for such defense (the cost of copying thereof to be paid by the Indemnifying
Party).
(d) Upon any final determination of a Third Party Claim pursuant to this
Section 4, the Indemnifying Party shall pay promptly on behalf of the
Indemnitee, or to the Indemnitee in reimbursement of any amount theretofore
required to be paid by it, the amount so determined. Upon the payment in full by
the Indemnifying Party of any such amount, the Indemnifying Party shall be
subrogated to the rights of such Indemnitee, to the extent not waived in
settlement, against the person who made such Third Party Claim with respect to
the subject matter of such claim.
(e) Except to the extent expressly provided otherwise herein, the
indemnification provided for by this Agreement shall not inure to the benefit of
any third party or parties and shall not relieve any insurer who would otherwise
be obligated to pay any claim of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, provide any
subrogation rights with respect thereto.
(f) Any claim on account of an Indemnifiable Loss which does not result
from a Third Party Claim shall be asserted by written notice given by the
related Indemnitee to the related Indemnifying Party. Such Indemnifying Party
shall have a period of 30 days within which to respond thereto. If such
Indemnifying Party does not respond within such 30-day period, such Indemnifying
Party shall be deemed to have accepted responsibility to make payment and shall
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have no further right to contest the validity of such claim. If such
Indemnifying Party does respond within such 30-day period and rejects such claim
in whole or in part, such Indemnitee shall be free to pursue all available legal
actions.
(g) If the indemnification provided for in this Agreement is unavailable
or insufficient to hold harmless an Indemnitee in respect of any Indemnifiable
Loss, then the Indemnifying Party shall contribute to the amount paid or payable
by such Indemnitee as a result of such Indemnifiable Loss, in such proportion as
is appropriate to reflect the relative fault of the Indemnitee on the one hand
and the Indemnifying Party on the other hand in connection with the
circumstances which resulted in such Indemnifiable Loss. The amount paid or
payable by an Indemnitee as a result of the Indemnifiable Loss referred to above
in this subsection (g) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnitee in connection with investigating or
defending any such action or claim.
5. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
(i) on the date of service if served personally on the party to whom notice is
to be given, (ii) on the day of transmission if sent via facsimile transmission
to the facsimile number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission, (iii) on the day after
delivery to Federal Express or similar overnight courier or the Express Mail
service maintained by the United States Postal Service or (iv) on the fifth day
after mailing, if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid and properly addressed, to
the party as follows:
If to ShopKo: ShopKo Stores, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx, XX 00000
Attention: President
cc: General Counsel
Telecopy: (000) 000-0000
If to ProVantage: ProVantage Health Services, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
cc: Legal Department
Telecopy: (000) 000-0000
Any party may change its address for the purpose of this Section by giving
the other party written notice of its new address in the manner set forth above.
6. General.
(a) Except as otherwise provided in this Agreement, no party hereto shall
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other
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party hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall be
binding upon, and inure solely to the benefit of, the parties hereto and, to the
extent provided herein, their respective Affiliates and the directors, officers,
employees and agents of the parties hereto and their respective Affiliates, and
their heirs, personal representatives, successors and permitted assigns.
(b) This Agreement may be amended or modified and any of the terms and
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by either party hereto of any condition, or of the breach of any
provision or term in any one or more instances, shall not be deemed to be nor
construed as further or continuing waiver of any such condition, or of the
breach of any other provision or term of this Agreement.
(c) This Agreement and other documents referred to herein contain the
entire understanding between the parties hereto with respect to the matters
specified herein and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such matters.
(d) In the event that any provision of this Agreement is declared by any
court or other judicial or administrative body to be null, void or
unenforceable, such provision shall survive to the extent it is not so declared,
and all of the other provisions of this Agreement shall remain in full force and
effect.
(e) Nothing in this Agreement is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than ShopKo or
ProVantage and, to the extent provided herein, ShopKo's and ProVantage's
respective directors, officers, employees, agents and Affiliates and their
respective heirs, executors, administrators, successors and permitted assigns.
Nothing in this Agreement is intended to relieve or discharge the obligations or
liability of any third persons to ShopKo or ProVantage. No provision of this
Agreement shall give any third persons any right of subrogation or action over
or against ShopKo or ProVantage or their respective directors, officers,
employees, agents and Affiliates.
(f) This Agreement shall be construed, performed and enforced in
accordance with, and governed by, the internal laws of the State of Wisconsin,
without giving effect to the principles of conflicts of laws thereof.
(g) The section and paragraph headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(h) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties as of the date first written above.
SHOPKO STORES, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Attest:
-----------------------------------
Xxxxxxx X. Xxxxxx, Xx. Vice President,
General Counsel/Secretary
PROVANTAGE HEALTH SERVICES, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief
Operating Officer
Attest:
------------------------------------
Xxxxxxx X. Xxxxxx, Secretary
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