DIRECTOR INDEMNIFICATION AGREEMENT
Exhibit
10.1
This
Director Indemnification Agreement, dated as of July 18, 2008 (this
“Agreement”),
is
made by and between LCA-Vision Inc., a Delaware corporation (the “Company”),
and
_______________________ (“Indemnitee”).
RECITALS:
A. Section 141
of the Delaware General Corporation Law provides that the business and affairs
of a corporation shall be managed by or under the direction of its board of
directors.
B. By
virtue
of the managerial prerogatives vested in the directors of a Delaware
corporation, directors act as fiduciaries of the corporation and its
stockholders.
C. Thus,
it
is critically important to the Company and its stockholders that the Company
be
able to attract and retain the most capable persons reasonably available to
serve as directors of the Company.
D. In
recognition of the need for corporations to be able to induce capable and
responsible persons to accept positions in corporate management, Delaware law
authorizes (and in some instances requires) corporations to indemnify their
directors and officers, and further authorizes corporations to purchase and
maintain insurance for the benefit of their directors and officers.
E. The
Delaware courts have recognized that indemnification by a corporation serves
the
dual policies of (1) allowing corporate officials to resist unjustified
lawsuits, secure in the knowledge that, if vindicated, the corporation will
bear
the expense of litigation and (2) encouraging capable women and men to serve
as
corporate directors and officers, secure in the knowledge that the corporation
will absorb the costs of defending their honesty and integrity.
F. The
number of lawsuits challenging the judgment and actions of directors of Delaware
corporations, the costs of defending those lawsuits, and the threat to
directors’ personal assets have all materially increased over the past several
years, chilling the willingness of capable women and men to undertake the
responsibilities imposed on corporate directors.
G. Recent
federal legislation and rules adopted by the Securities and Exchange Commission
and the national securities exchanges have imposed additional disclosure and
corporate governance obligations on directors of public companies and have
exposed such directors to new and substantially broadened civil liabilities.
H. These
legislative and regulatory initiatives have also exposed directors of public
companies to a significantly greater risk of criminal proceedings, with
attendant defense costs and potential criminal fines and penalties.
I. Under
Delaware law, a director’s right to be reimbursed for the costs of defense of
criminal actions, whether such claims are asserted under state or federal law,
does not depend upon the merits of the claims asserted against the director
and
is separate and distinct from any right to indemnification the director may
be
able to establish, and indemnification of the director against criminal fines
and penalties is permitted if the director satisfies the applicable standard
of
conduct.
J. Indemnitee
is a director of the Company and his/her willingness to serve in such capacity
is predicated, in substantial part, upon the Company’s willingness to indemnify
him/her in accordance with the principles reflected above, to the fullest extent
permitted by the laws of the state of Delaware, and upon the other undertakings
set forth in this Agreement.
K. Article
Sixth of the Company’s Restated Certificate of Incorporation and Article VI of
its By-laws now require the Company to indemnify each director to the full
extent permitted by law. However, the recent Delaware Chancery decision in
Schroon
v. Troy,
C.A.
No. 2362, 2008 WL 000000 (Xxx. Xx. Mar. 28, 2008), has called into the question
the ability of directors to rely on such provisions following their retirement
or other departure from the board in the event there is a subsequent amendment
to the charter documents that alters or eliminates the indemnification
provisions of those documents.
L. Therefore,
in recognition of the need to provide Indemnitee with substantial protection
against personal liability, in order to procure Indemnitee’s continued service
as a director of the Company and to enhance Indemnitee’s ability to serve the
Company in an effective manner, and in order to provide such protection pursuant
to express contract rights (intended to be enforceable irrespective of, among
other things, any amendment to the Company’s certificate of incorporation or
bylaws (collectively, the “Constituent
Documents”),
any
change in the composition of the Company’s Board of Directors (the “Board”)
or any
change-in-control or business combination transaction relating to the Company),
the Company wishes to provide in this Agreement for the indemnification of
and
the advancement of Expenses (as defined in Section 1(e)) to Indemnitee as set
forth in this Agreement and for the continued coverage of Indemnitee under
the
Company’s directors’ and officers’ liability insurance policies.
M. In
light
of the considerations referred to in the preceding recitals, it is the Company’s
intention and desire that the provisions of this Agreement be construed
liberally, subject to their express terms, to maximize the protections to be
provided to Indemnitee hereunder.
AGREEMENT:
NOW,
THEREFORE, the parties hereby agree as follows:
1. Certain
Definitions.
In
addition to terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital
letters:
(a)“Change
in Control”
means
the occurrence after the date of this Agreement of any of the following
events:
(i)the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”)
of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; provided,
however,
that:
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(A) for
purposes of this Section 1(a)(i), the following acquisitions shall not
constitute a Change in Control: (1) any acquisition of Voting Stock of the
Company directly from the Company that is approved by a majority of the
Incumbent Directors, (2) any acquisition of Voting Stock of the Company by
the Company or any Subsidiary, (3) any acquisition of Voting Stock of the
Company by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any Subsidiary, and (4) any acquisition of Voting Stock of
the
Company by any Person pursuant to a Business Combination that complies with
clauses (A), (B) and (C) of Section 1(a)(iii) below;
(B) if
any
Person acquires beneficial ownership of 20% or more of combined voting power
of
the then-outstanding Voting Stock of the Company as a result of a transaction
described in clause (A)(1) of Section 1(a)(i) and such Person thereafter
becomes the beneficial owner of any additional shares of Voting Stock of the
Company representing 1% or more of the then-outstanding Voting Stock of the
Company, other than in an acquisition directly from the Company that is approved
by a majority of the Incumbent Directors or other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Voting Stock are treated equally, such subsequent acquisition
shall be deemed to constitute a Change in Control;
(C) a
Change
in Control will not be deemed to have occurred if a Person acquires beneficial
ownership of 20% or more of the Voting Stock of the Company as a result of
a
reduction in the number of shares of Voting Stock of the Company outstanding
unless and until such Person thereafter becomes the beneficial owner of any
additional shares of Voting Stock of the Company representing 1% or more of
the
then-outstanding Voting Stock of the Company, other than in an acquisition
directly from the Company that is approved by a majority of the Incumbent
Directors or other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are
treated equally; and
(D) if
at
least a majority of the Incumbent Directors determine in good faith that a
Person has acquired beneficial ownership of 20% or more of the Voting Stock
of
the Company inadvertently, and such Person divests as promptly as practicable
a
sufficient number of shares so that such Person beneficially owns less than
20%
of the Voting Stock of the Company, then no Change in Control shall have
occurred as a result of such Person’s acquisition; or
(ii)a
majority of the Directors are not Incumbent Directors; or
(iii)the
consummation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another corporation, or other transaction (each, a
“Business
Combination”),
unless, in each case, immediately following such Business Combination
(A) all or substantially all of the individuals and entities who were the
beneficial owners of Voting Stock of the Company immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 60%
of
the combined voting power of the then outstanding shares of Voting Stock of
the
entity resulting from such Business Combination (including, without limitation,
an entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries), (B) no Person (other than the Company, such entity resulting
from such Business Combination, or any employee benefit plan (or related trust)
sponsored or maintained by the Company, any Subsidiary or such entity resulting
from such Business Combination) beneficially owns, directly or indirectly,
20%
or more of the combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination, and (C) at
least a majority of the members of the Board of Directors of the entity
resulting from such Business Combination were Incumbent Directors at the time
of
the execution of the initial agreement or of the action of the Board providing
for such Business Combination; or
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(iv)approval
by the stockholders of the Company of a complete liquidation or dissolution
of
the Company, except pursuant to a Business Combination that complies with
clauses (A), (B) and (C) of Section 1(a)(iii).
(v)For
purposes of this Section 1(a) and as used elsewhere in this Agreement, the
following terms shall have the following meanings:
(A) “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
(B) “Incumbent
Directors”
means
the individuals who, as of the date hereof, are Directors of the Company and
any
individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Company’s stockholders, or appointment, was
approved by a vote of at least two-thirds of the then Incumbent Directors
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without objection
to
such nomination); provided,
however,
that an
individual shall not be an Incumbent Director if such individual’s election or
appointment to the Board occurs as a result of an actual or threatened election
contest (as described in Rule 14a-12(c) of the Exchange Act) with respect
to the election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board.
(C) “Subsidiary”
means an
entity in which the Company directly or indirectly beneficially owns 50% or
more
of the outstanding Voting Stock.
(D) “Voting
Stock”
means
securities entitled to vote generally in the election of directors (or similar
governing bodies).
(b)“Claim”
means
(i) any threatened, asserted, pending or completed claim, demand, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative,
investigative or other, and whether made pursuant to federal, state or other
law; and (ii) any threatened, pending or completed inquiry or
investigation, whether made, instituted or conducted by the Company or any
other
person, including without limitation any federal, state or other governmental
entity, that Indemnitee determines might lead to the institution of any such
claim, demand, action, suit or proceeding.
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(c)“Controlled
Affiliate”
means
any corporation, limited liability company, partnership, joint venture, trust
or
other entity or enterprise, whether or not for profit, that is directly or
indirectly controlled by the Company. For purposes of this definition, “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity or enterprise, whether
through the ownership of voting securities, through other voting rights, by
contract or otherwise; provided
that
direct or indirect beneficial ownership of capital stock or other interests
in
an entity or enterprise entitling the holder to cast 20% or more of the total
number of votes generally entitled to be cast in the election of directors
(or
persons performing comparable functions) of such entity or enterprise shall
be
deemed to constitute control for purposes of this definition.
(d)“Disinterested
Director”
means
a
director of the Company who is not and was not a party to the Claim in respect
of which indemnification is sought by Indemnitee.
(e)“Expenses”
means
attorneys’ and experts’ fees and expenses and all other costs and expenses paid
or payable in connection with investigating, defending, being a witness in
or
participating in (including on appeal), or preparing to investigate, defend,
be
a witness in or participate in (including on appeal), any Claim.
(f)“Indemnifiable
Claim”
means
any Claim based upon, arising out of or resulting from (i) any actual,
alleged or suspected act or failure to act by Indemnitee in his or her capacity
as a director, officer, employee or agent of the Company or as a director,
officer, employee, member, manager, trustee or agent of any other corporation,
limited liability company, partnership, joint venture, trust or other entity
or
enterprise, whether or not for profit, as to which Indemnitee is or was serving
at the request of the Company as a director, officer, employee, member, manager,
trustee or agent, (ii) any actual, alleged or suspected act or failure to
act by Indemnitee in respect of any business, transaction, communication,
filing, disclosure or other activity of the Company or any other entity or
enterprise referred to in clause (i) of this sentence, or
(iii) Indemnitee’s status as a current or former director, officer,
employee or agent of the Company or as a current or former director, officer,
employee, member, manager, trustee or agent of the Company or any other entity
or enterprise referred to in clause (i) of this sentence or any actual,
alleged or suspected act or failure to act by Indemnitee in connection with
any
obligation or restriction imposed upon Indemnitee by reason of such status.
In
addition to any service at the actual request of the Company, for purposes
of
this Agreement, Indemnitee shall be deemed to be serving or to have served
at
the request of the Company as a director, officer, employee, member, manager,
trustee or agent of another entity or enterprise if Indemnitee is or was serving
as a director, officer, employee, member, manager, trustee or agent of such
entity or enterprise and (i) such entity or enterprise is or at the time of
such service was a Controlled Affiliate, (ii) such entity or enterprise is
or at the time of such service was an employee benefit plan (or related trust)
sponsored or maintained by the Company or a Controlled Affiliate, or
(iii) the Company or a Controlled Affiliate directly or indirectly caused
or authorized Indemnitee to be nominated, elected, appointed, designated,
employed, engaged or selected to serve in such capacity.
(g)“Indemnifiable
Losses” means
any
and all Losses relating to, arising out of or resulting from any Indemnifiable
Claim.
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(h)“Independent
Counsel”
means
a
law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five years has been,
retained to represent: (i) the Company (or any Subsidiary) or Indemnitee in
any matter material to either such party (other than with respect to matters
concerning the Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), or (ii) any other named (or, as to a
threatened matter, reasonably likely to be named) party to the Indemnifiable
Claim giving rise to a claim for indemnification hereunder. Notwithstanding
the
foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee
in
an action to determine Indemnitee’s rights under this Agreement.
(i)“Losses”
means
any and all Expenses, damages, losses, liabilities, judgments, fines, penalties
(whether civil, criminal or other) and amounts paid in settlement, including
without limitation all interest, assessments and other charges paid or payable
in connection with or in respect of any of the foregoing.
2.Indemnification
Obligation.
Subject
to Section 7, the Company shall indemnify, defend and hold harmless
Indemnitee, to the fullest extent permitted or required by the laws of the
State
of Delaware in effect on the date hereof or as such laws may from time to time
hereafter be amended to increase the scope of such permitted indemnification,
against any and all Indemnifiable Claims and Indemnifiable Losses; provided,
however,
that,
except as provided in Sections 4 and 20, Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection with any Claim
initiated by Indemnitee against the Company or any director or officer of the
Company unless the Company has joined in or consented to the initiation of
such
Claim.
3.Advancement
of Expenses.
Indemnitee shall have the right to advancement by the Company prior to the
final
disposition of any Indemnifiable Claim of any and all Expenses relating to,
arising out of or resulting from any Indemnifiable Claim paid or incurred by
Indemnitee or which Indemnitee determines are reasonably likely to be paid
or
incurred by Indemnitee. Indemnitee’s right to such advancement is not subject to
the satisfaction of any standard of conduct. Without limiting the generality
or
effect of the foregoing, within five business days after any request by
Indemnitee, the Company shall, in accordance with such request (but without
duplication), (a) pay such Expenses on behalf of Indemnitee,
(b) advance to Indemnitee funds in an amount sufficient to pay such
Expenses, or (c) reimburse Indemnitee for such Expenses; provided
that
Indemnitee shall repay, without interest any amounts actually advanced to
Indemnitee that, at the final disposition of the Indemnifiable Claim to which
the advance related, were in excess of amounts paid or payable by Indemnitee
in
respect of Expenses relating to, arising out of or resulting from such
Indemnifiable Claim. In connection with any such payment, advancement or
reimbursement, Indemnitee shall execute and deliver to the Company an
undertaking in the form attached hereto as Exhibit
A
(subject
to Indemnitee filling in the blanks therein and selecting from among the
bracketed alternatives therein), which need not be secured and shall be accepted
without reference to Indemnitee’s ability to repay the Expenses. In no event
shall Indemnitee’s right to the payment, advancement or reimbursement of
Expenses pursuant to this Section 3 be conditioned upon any undertaking that
is
less favorable to Indemnitee than, or that is in addition to, the undertaking
set forth in Exhibit
A.
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4.Indemnification
for Additional Expenses.
Without
limiting the generality or effect of the foregoing, the Company shall indemnify
and hold harmless Indemnitee against and, if requested by Indemnitee, shall
reimburse Indemnitee for, or advance to Indemnitee, within five business days
of
such request, any and all Expenses paid or incurred by Indemnitee or which
Indemnitee determines are reasonably likely to be paid or incurred by Indemnitee
in connection with any Claim made, instituted or conducted by Indemnitee for
(a) indemnification or payment, advancement or reimbursement of Expenses by
the Company under any provision of this Agreement, or under any other agreement
or provision of the Constituent Documents now or hereafter in effect relating
to
Indemnifiable Claims, and/or (b) recovery under any directors’ and
officers’ liability insurance policies maintained by the Company, regardless in
each case of whether Indemnitee ultimately is determined to be entitled to
such
indemnification, reimbursement, advance or insurance recovery, as the case
may
be; provided,
however,
that
Indemnitee shall return, without interest, any such advance of Expenses (or
portion thereof) which remains unspent at the final disposition of the Claim
to
which the advance related.
5.Partial
Indemnity.
If
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any Indemnifiable Loss, but not for
all
of the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled.
6.Procedure
for Notification.
To
obtain indemnification under this Agreement in respect of an Indemnifiable
Claim
or Indemnifiable Loss, Indemnitee shall submit to the Company a written request
therefore, including a brief description (based upon information then available
to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the
time of the receipt of such request, the Company has directors’ and officers’
liability insurance in effect under which coverage for such Indemnifiable Claim
or Indemnifiable Loss is potentially available, the Company shall give prompt
written notice of such Indemnifiable Claim or Indemnifiable Loss to the
applicable insurers in accordance with the procedures set forth in the
applicable policies. The Company shall provide to Indemnitee a copy of such
notice delivered to the applicable insurers, and copies of all subsequent
correspondence between the Company and such insurers regarding the Indemnifiable
Claim or Indemnifiable Loss, in each case substantially concurrently with the
delivery or receipt thereof by the Company. The failure by Indemnitee to timely
notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not
relieve the Company from any liability hereunder unless, and only to the extent
that, the Company did not otherwise learn of such Indemnifiable Claim or
Indemnifiable Loss and such failure results in forfeiture by the Company of
substantial defenses, rights or insurance coverage.
7.Determination
of Right to Indemnification.
(a)To
the
extent that Indemnitee shall have been successful on the merits or otherwise
in
defense of any Indemnifiable Claim or any portion thereof or in defense of
any
issue or matter therein, including without limitation dismissal without
prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses
relating to, arising out of or resulting from such Indemnifiable Claim in
accordance with Section 2 and no Standard of Conduct Determination (as
defined in Section 7(b)) shall be required.
7
(b)To
the
extent that the provisions of Section 7(a) are inapplicable to an
Indemnifiable Claim that shall have been finally disposed of, any determination
of whether Indemnitee has satisfied any applicable standard of conduct under
Delaware law that is a legally required condition precedent to indemnification
of Indemnitee hereunder against Indemnifiable Losses relating to, arising out
of
or resulting from such Indemnifiable Claim (a “Standard
of Conduct Determination”)
shall
be made as follows: (i) if a Change in Control shall not have occurred, or
if a Change in Control shall have occurred but Indemnitee shall have requested
that the Standard of Conduct Determination be made pursuant to this clause
(i),
(A) by a majority vote of the Disinterested Directors, even if less than a
quorum of the Board, (B) if such Disinterested Directors so direct, by a
majority vote of a committee of Disinterested Directors designated by a majority
vote of all Disinterested Directors, or (C) if there are no such
Disinterested Directors, by Independent Counsel in a written opinion addressed
to the Board, a copy of which shall be delivered to Indemnitee; and (ii) if
a Change in Control shall have occurred and Indemnitee shall not have requested
that the Standard of Conduct Determination be made pursuant to clause (i),
by Independent Counsel in a written opinion addressed to the Board, a copy
of
which shall be delivered to Indemnitee. Indemnitee will cooperate with the
person or persons making such Standard of Conduct Determination, including
providing to such person or persons, upon reasonable advance request, any
documentation or information which is not privileged or otherwise protected
from
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. The Company shall indemnify and hold harmless
Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee
for, or advance to Indemnitee, within five business days of such request, any
and all costs and expenses (including attorneys’ and experts’ fees and expenses)
incurred by Indemnitee in so cooperating with the person or persons making
such
Standard of Conduct Determination.
(c)The
Company shall use its reasonable best efforts to cause any Standard of Conduct
Determination required under Section 7(b) to be made as promptly as
practicable. If (i) the person or persons empowered or selected under
Section 7 to make the Standard of Conduct Determination shall not have made
a determination within 30 days after the later of (A) receipt by the
Company of written notice from Indemnitee advising the Company of the final
disposition of the applicable Indemnifiable Claim (the date of such receipt
being the “Notification
Date”)
and
(B) the selection of an Independent Counsel, if such determination is to be
made by Independent Counsel, that is permitted under the provisions of
Section 7(e) to make such determination and (ii) Indemnitee shall have
fulfilled his/her obligations set forth in the second sentence of
Section 7(b), then Indemnitee shall be deemed to have satisfied the
applicable standard of conduct; provided
that
such 30-day period may be extended for a reasonable time, not to exceed an
additional 30 days, if the person or persons making such determination in
good faith requires such additional time for the obtaining or evaluation or
documentation and/or information relating thereto.
(d)If
(i) Indemnitee shall be entitled to indemnification hereunder against any
Indemnifiable Losses pursuant to Section 7(a), (ii) no determination
of whether Indemnitee has satisfied any applicable standard of conduct under
Delaware law is a legally required condition precedent to indemnification of
Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee
has been determined or deemed pursuant to Section 7(b) or (c) to have
satisfied any applicable standard of conduct under Delaware law which is a
legally required condition precedent to indemnification of Indemnitee hereunder
against any Indemnifiable Losses, then the Company shall pay to Indemnitee,
within five business days after the later of (x) the Notification Date in
respect of the Indemnifiable Claim or portion thereof to which such
Indemnifiable Losses are related, out of which such Indemnifiable Losses arose
or from which such Indemnifiable Losses resulted and (y) the earliest date
on which the applicable criterion specified in clause (i), (ii) or (iii) above
shall have been satisfied, an amount equal to the amount of such Indemnifiable
Losses.
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(e)If
a
Standard of Conduct Determination is to be made by Independent Counsel pursuant
to Section 7(b)(i), the Independent Counsel shall be selected by the Board
of Directors, and the Company shall give written notice to Indemnitee advising
him or her of the identity of the Independent Counsel so selected. If a Standard
of Conduct Determination is to be made by Independent Counsel pursuant to
Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee,
and Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected. In either case, Indemnitee
or
the Company, as applicable, may, within five business days after receiving
written notice of selection from the other, deliver to the other a written
objection to such selection; provided,
however,
that
such objection may be asserted only on the ground that the Independent Counsel
so selected does not satisfy the criteria set forth in the definition of
“Independent Counsel” in Section 1(h), and the objection shall set forth
with particularity the factual basis of such assertion. Absent a proper and
timely objection, the person or firm so selected shall act as Independent
Counsel. If such written objection is properly and timely made and
substantiated, (i) the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court
has
determined that such objection is without merit and (ii) the non-objecting
party may, at its option, select an alternative Independent Counsel and give
written notice to the other party advising such other party of the identity
of
the alternative Independent Counsel so selected, in which case the provisions
of
the two immediately preceding sentences and clause (i) of this sentence
shall apply to such subsequent selection and notice. If applicable, the
provisions of clause (ii) of the immediately preceding sentence shall apply
to successive alternative selections. If no Independent Counsel that is
permitted under the foregoing provisions of this Section 7(e) to make the
Standard of Conduct Determination shall have been selected within 30 days
after the Company gives its initial notice pursuant to the first sentence of
this Section 7(e) or Indemnitee gives its initial notice pursuant to the
second sentence of this Section 7(e), as the case may be, either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware for resolution of any objection which shall have been made by the
Company or Indemnitee to the other’s selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person or firm selected by the
Court
or by such other person as the Court shall designate, and the person or firm
with respect to whom all objections are so resolved or the person or firm so
appointed will act as Independent Counsel. In all events, the Company shall
pay
all of the reasonable fees and expenses of the Independent Counsel incurred
in
connection with the Independent Counsel’s determination pursuant to
Section 7(b).
8.Presumption
of Entitlement. In
making
any Standard of Conduct Determination, the person or persons making such
determination shall presume that Indemnitee has satisfied the applicable
standard of conduct, and the Company may overcome such presumption only by
its
adducing clear and convincing evidence to the contrary. Any Standard of Conduct
Determination that is adverse to Indemnitee may be challenged by the Indemnitee
in the Court of Chancery of the State of Delaware. No determination by the
Company (including by its directors or any Independent Counsel) that Indemnitee
has not satisfied any applicable standard of conduct shall be a defense to
any
Claim by Indemnitee for indemnification or reimbursement or advance payment
of
Expenses by the Company hereunder or create a presumption that Indemnitee has
not met any applicable standard of conduct.
0.Xx
Other Presumption.
For
purposes of this Agreement, the termination of any Claim by judgment, order,
settlement (whether with or without court approval) or conviction, or upon
a
plea of nolo
contendere
or its
equivalent, will not create a presumption that Indemnitee did not meet any
applicable standard of conduct or that indemnification hereunder is otherwise
not permitted.
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10.Non-Exclusivity.
The
rights of Indemnitee hereunder will be in addition to any other rights
Indemnitee may have under the Constituent Documents, or the substantive laws
of
the Company’s jurisdiction of incorporation, any other contract or otherwise
(collectively, “Other
Indemnity Provisions”);
provided,
however,
that
(a) to the extent that Indemnitee otherwise would have any greater right to
indemnification under any Other Indemnity Provision, Indemnitee will be deemed
to have such greater right hereunder and (b) to the extent that any change
is made to any Other Indemnity Provision which permits any greater right to
indemnification than that provided under this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right hereunder. The Company
will
not adopt any amendment to any of the Constituent Documents the effect of which
would be to deny, diminish or encumber Indemnitee’s right to indemnification
under this Agreement or any Other Indemnity Provision.
11.Liability
Insurance and Funding.
For the
duration of Indemnitee’s service as a director and/or officer of the Company,
and thereafter for so long as Indemnitee shall be subject to any pending or
possible Indemnifiable Claim, the Company shall use commercially reasonable
efforts (taking into account the scope and amount of coverage available relative
to the cost thereof) to cause to be maintained in effect policies of directors’
and officers’ liability insurance providing coverage for directors and/or
officers of the Company that is at least substantially comparable in scope
and
amount to that provided by the Company’s current policies of directors’ and
officers’ liability insurance. The Company shall provide Indemnitee with a copy
of all directors’ and officers’ liability insurance applications, binders,
policies, declarations, endorsements and other related materials, and shall
provide Indemnitee with a reasonable opportunity to review and comment on the
same. Without limiting the generality or effect of the two immediately preceding
sentences, the Company shall not discontinue or significantly reduce the scope
or amount of coverage from one policy period to the next (i) without the
prior approval thereof by a majority vote of the Incumbent Directors, even
if
less than a quorum, or (ii) if at the time that any such discontinuation or
significant reduction in the scope or amount of coverage is proposed there
are
no Incumbent Directors, without the prior written consent of Indemnitee (which
consent shall not be unreasonably withheld or delayed). In all policies of
directors’ and officers’ liability insurance obtained by the Company, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the
same
rights and benefits, subject to the same limitations, as are accorded to the
Company’s directors and officers most favorably insured by such policy. The
Company may, but shall not be required to, create a trust fund, grant a security
interest or use other means, including without limitation a letter of credit,
to
ensure the payment of such amounts as may be necessary to satisfy its
obligations to indemnify and advance expenses pursuant to this
Agreement.
12.Subrogation.
In the
event of payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the related rights of recovery of Indemnitee
against other persons or entities (other than Indemnitee’s successors),
including any entity or enterprise referred to in clause (i) of the definition
of “Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all
papers reasonably required to evidence such rights (all of Indemnitee’s
reasonable Expenses, including attorneys’ fees and charges, related thereto to
be reimbursed by or, at the option of Indemnitee, advanced by the
Company).
10
00.Xx
Duplication of Payments.
The
Company shall not be liable under this Agreement to make any payment to
Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee
has
otherwise actually received payment (net of Expenses incurred in connection
therewith) under any insurance policy, the Constituent Documents and Other
Indemnity Provisions or otherwise (including from any entity or enterprise
referred to in clause (i) of the definition of “Indemnifiable Claim” in
Section 1(f)) in respect of such Indemnifiable Losses otherwise
indemnifiable hereunder.
14.Defense
of Claims.
The
Company shall be entitled to participate in the defense of any Indemnifiable
Claim or to assume the defense thereof, with counsel reasonably satisfactory
to
the Indemnitee; provided
that if
Indemnitee believes, after consultation with counsel selected by Indemnitee,
that (a) the use of counsel chosen by the Company to represent Indemnitee
would present such counsel with an actual or potential conflict, (b) the
named parties in any such Indemnifiable Claim (including any impleaded parties)
include both the Company and Indemnitee and Indemnitee shall conclude that
there
may be one or more legal defenses available to him or her that are different
from or in addition to those available to the Company, or (c) any such
representation by such counsel would be precluded under the applicable standards
of professional conduct then prevailing, then Indemnitee shall be entitled
to
retain separate counsel (but not more than one law firm plus, if applicable,
local counsel in respect of any particular Indemnifiable Claim) at the Company’s
expense. The Company shall not be liable to Indemnitee under this Agreement
for
any amounts paid in settlement of any threatened or pending Indemnifiable Claim
effected without the Company’s prior written consent. The Company shall not,
without the prior written consent of the Indemnitee, effect any settlement
of
any threatened or pending Indemnifiable Claim to which the Indemnitee is,
or could have been, a party unless such settlement solely involves the payment
of money and includes a complete and unconditional release of the Indemnitee
from all liability on any claims that are the subject matter of such
Indemnifiable Claim. 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 and unconditional release of Indemnitee.
15.Successors
and Binding Agreement.
(a) The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially
all
of the business or assets of the Company, by agreement in form and substance
satisfactory to Indemnitee and his or her counsel, expressly to assume and
agree
to perform this Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of the Company and
any
successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of
the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor will thereafter be deemed the “Company”
for
purposes of this Agreement), but shall not otherwise be assignable or
delegatable by the Company.
(b)This
Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s
personal or legal representatives, executors, administrators, heirs,
distributees, legatees and other successors.
11
(c)This
Agreement is personal in nature and neither of the parties hereto shall, without
the consent of the other, assign or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Sections 15(a) and
15(b). Without limiting the generality or effect of the foregoing, Indemnitee’s
right to receive payments hereunder shall not be assignable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by the
Indemnitee’s will or by the laws of descent and distribution, and, in the event
of any attempted assignment or transfer contrary to this Section 15(c), the
Company shall have no liability to pay any amount so attempted to be assigned
or
transferred.
16.Notices.
For all
purposes of this Agreement, all communications, including without limitation
notices, consents, requests or approvals, required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid or one business day after having been sent for next-day delivery by
a
nationally recognized overnight courier service, addressed to the Company (to
the attention of the Secretary of the Company) and to Indemnitee at the
applicable address shown on the signature page hereto, or to such other address
as any party may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address will be effective only
upon
receipt.
17.Governing
Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by and construed in accordance with the substantive laws of the
State of Delaware, without giving effect to the principles of conflict of laws
of such State. The Company and Indemnitee each hereby irrevocably consent to
the
jurisdiction of the Chancery Court of the State of Delaware for all purposes
in
connection with any action or proceeding which arises out of or relates to
this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the Chancery Court of the State of Delaware.
18.Validity.
If any
provision of this Agreement or the application of any provision hereof to any
person or circumstance is held invalid, unenforceable or otherwise illegal,
the
remainder of this Agreement and the application of such provision to any other
person or circumstance shall not be affected, and the provision so held to
be
invalid, unenforceable or otherwise illegal shall be reformed to the extent,
and
only to the extent, necessary to make it enforceable, valid or legal. In the
event that any court or other adjudicative body shall decline to reform any
provision of this Agreement held to be invalid, unenforceable or otherwise
illegal as contemplated by the immediately preceding sentence, the parties
thereto shall take all such action as may be necessary or appropriate to replace
the provision so held to be invalid, unenforceable or otherwise illegal with
one
or more alternative provisions that effectuate the purpose and intent of the
original provisions of this Agreement as fully as possible without being
invalid, unenforceable or otherwise illegal.
19.Miscellaneous.
No
provision of this Agreement may be waived, modified or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Indemnitee
and the Company. No waiver by either party hereto at any time of any breach
by
the other party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or
subsequent time. No agreements or representations, oral or otherwise, expressed
or implied with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement. References to Sections
are to references to Sections of this Agreement.
12
00.Xxxxx
Fees and Expenses.
It is
the intent of the Company that Indemnitee not be required to incur legal fees
and or other Expenses associated with the interpretation, enforcement or defense
of Indemnitee’s rights under this Agreement by litigation or otherwise because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to Indemnitee hereunder. Accordingly, without limiting
the generality or effect of any other provision hereof, if it should appear
to
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement (including its obligations under Section 3) or in the
event
that the Company or any other person takes or threatens to take any action
to
declare this Agreement void or unenforceable, or institutes any litigation
or
other action or proceeding designed to deny, or to recover from, Indemnitee
the
benefits provided or intended to be provided to Indemnitee hereunder, the
Company irrevocably authorizes the Indemnitee from time to time to retain
counsel of Indemnitee’s choice, at the expense of the Company as hereafter
provided, to advise and represent Indemnitee in connection with any such
interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel,
the
Company irrevocably consents to Indemnitee’s entering into an attorney-client
relationship with such counsel, and in that connection the Company and
Indemnitee agree that a confidential relationship shall exist between Indemnitee
and such counsel. Without respect to whether Indemnitee prevails, in whole
or in
part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys’ and related fees and
expenses incurred by Indemnitee in connection with any of the
foregoing.
21.Certain
Interpretive Matters.
Unless
the context of this Agreement otherwise requires, (a) “it” or “its” or
words of any gender include each other gender, (b) words using the singular
or plural number also include the plural or singular number, respectively,
(c) the terms “hereof,” “herein,” “hereby” and derivative or similar words
refer to this entire Agreement, (d) the terms “Article,” “Section,” “Annex”
or “Exhibit” refer to the specified Article, Section, Annex or Exhibit of or to
this Agreement, (e) the terms “include,” “includes” and “including” will be
deemed to be followed by the words “without limitation” (whether or not so
expressed), and (f) the word “or” is disjunctive but not exclusive.
Whenever this Agreement refers to a number of days, such number will refer
to
calendar days unless business days are specified and whenever action must be
taken (including the giving of notice or the delivery of documents) under this
Agreement during a certain period of time or by a particular date that ends
or
occurs on a non-business day, then such period or date will be extended until
the immediately following business day. As used herein, “business day” means any
day other than Saturday, Sunday or a United States federal holiday.
22.Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original but all of which together shall constitute one and
the
same agreement.
[Signatures
Appear On Following Page]
13
IN
WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly
authorized representative to execute this Agreement as of the date first above
written.
|
LCA-VISION
INC.
|
|||
|
0000
Xxxxxxxxxx Xxxx,
|
|||
|
Xxxxxxxxxx,
Xxxx 00000
|
|||
|
By:
|
|||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
||
|
Title:
|
Chief
Executive Officer
|
||
|
[INDEMNITEE]
|
|||
|
[Address]
|
|||
|
[Indemnitee]
|
|||
14
EXHIBIT
A
UNDERTAKING
This
Undertaking is submitted pursuant to the Director Indemnification Agreement,
dated as of ___________ ___, ____ (the “Indemnification
Agreement”),
between LCA-Vision Inc., a Delaware corporation (the “Company”),
and
the undersigned. Capitalized terms used and not otherwise defined herein have
the meanings ascribed to such terms in the Indemnification
Agreement.
The
undersigned hereby requests [payment],
[advancement], [reimbursement]
by the
Company of Expenses which the undersigned [has
incurred] [reasonably expects to incur]
in
connection with ______________________ (the “Indemnifiable
Claim”).
The
undersigned hereby undertakes to repay the [payment],
[advancement], [reimbursement]
of
Expenses made by the Company to or on behalf of the undersigned in response
to
the foregoing request if it is determined, following the final disposition
of
the Indemnifiable Claim and in accordance with Section 7 of the Indemnification
Agreement, that the undersigned is not entitled to indemnification by the
Company under the Indemnification Agreement with respect to the Indemnifiable
Claim.
IN
WITNESS WHEREOF, the undersigned has executed this Undertaking as of this _____
day of ______________, ____.
|
[Indemnitee]
|
15
