EXHIBIT 10.4
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INDEMNIFICATION AGREEMENT
This Agreement, effective as of February 12, 1997 and dated as of
March 4, 1997, is made by and between Xxxxxx Xxxxxx VisionCare, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxx who is currently serving as an
officer and director of the Company (the "Indemnitee").
WHEREAS, the Indemnitee is currently serving in the capacity or
capacities described above;
WHEREAS, the Company has made an initial public offering of its common
stock (the "Offering"), which likely has increased the risk of litigation and
other claims being asserted against the directors and officers of the Company;
WHEREAS, the Company wishes the Indemnitee to continue to serve in
such capacity or capacities and the Indemnitee is willing, under certain
circumstances, to continue in such capacity or capacities;
WHEREAS, damages sought and sometimes paid in many claims made against
corporate directors and officers and the expenses required to defend such
claims, whether or not the allegations are meritorious, may not bear a
reasonable relationship to the amount of compensation received by and may be
beyond the financial resources of the Indemnitee;
WHEREAS, the Indemnitee is currently entitled to indemnification under
Delaware General Corporation Law and the Certificate of Incorporation of the
Company, which the Indemnitee does not regard to be adequate protection against
the risks associated with his service to or at the request of the Company;
WHEREAS, the Indemnitee and the Company have concluded that the
exposure to risk of personal liability and payment of damages out of the
Indemnitee's personal assets may result in overly conservative direction and
supervision of the Company's affairs, which is detrimental to the best interests
of the Company and its stockholders; and
WHEREAS, the Company has concluded that additional protection is
necessary for its directors and elected officers.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee, agent or
fiduciary of the Company or a subsidiary of the Company, or is or was serving at
the request of, for the convenience of, or to represent the interests of the
Company or a subsidiary of the Company as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, trust or other
enterprise or entity, including service with respect to an employee benefit
plan.
(b) Disinterested Director. For purposes of this Agreement,
"Disinterested Director" of the Company means a director of the Company who is
not and was not a party to the proceeding for which indemnification is being
sought by the claimant.
(c) Expenses. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements, other out-of-
pocket costs and reasonable compensation for time spent by the Indemnitee for
which he is not otherwise compensated by the Company or any third party)
actually and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement, Section 145 of the General
Corporation Law of Delaware or otherwise; provided, however, that expenses shall
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not include any judgments, fines, excise taxes or penalties under the Employee
Retirement Income Security Act of 1974 ("ERISA"), or amounts paid in settlement
of a proceeding.
(d) Independent Legal Counsel. For purposes of this Agreement,
"Independent Legal Counsel" means a law firm, a member of a law firm, or an
independent practitioner, that is experienced in matters of corporation law and
shall include any person who, under the applicable standards of professional
conduct then prevailing, would not have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the Indemnitee's
rights under this Agreement.
(e) Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
(f) Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation, partnership, joint venture or other enterprise, a majority of
whose equity interests are owned by the Company, directly or through one or more
other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve as an agent
of the Company, at its will (or under separate agreement, if such agreement
exists), in the capacity Indemnitee currently serves as an agent of the Company,
so long as he is duly appointed or elected and qualified in accordance with the
applicable provisions of the By-Laws of the Company or any subsidiary of the
Company or until such time as he tenders his resignation in writing; provided,
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however, that nothing contained in this Agreement is intended to create any
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right to continued employment of the Indemnitee.
3. Mandatory Indemnification. Subject to the limitations set forth
in Section 7, if the Indemnitee is a person who was or is a party or is
threatened to be made a party to or is involved, including involvement as a
witness, in any proceeding, including any action by or in the right of the
Company, by reason of the fact that he is or was or has agreed to become an
agent, or by reason of any action alleged to have been taken or omitted by him
in any such capacity, the Company shall indemnify the Indemnitee against all
expense, liability and loss (including but not limited to judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement),
actually and reasonably incurred by him in connection with the investigation,
defense,
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settlement or appeal of such proceeding; provided, however, that except as
provided in Section 7(c) of this Agreement with respect to proceedings seeking
to enforce rights to indemnification, the Company shall indemnify the Indemnitee
in connection with a proceeding (or part thereof) initiated by the Indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Company.
4. Mandatory Advancement of Expenses. The Company shall advance all
expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding referred to in Section 3 to
which the Indemnitee is a party or is threatened to be made a party or with
respect to which the Indemnitee is otherwise involved (including involvement as
a witness) as an agent of the Company. The Indemnitee hereby undertakes to
repay such amounts advanced if, but only if and to the extent that, it shall
ultimately be determined pursuant to the provisions hereof that the Indemnitee
is not entitled to be indemnified by the Company as authorized hereby. The
advances to be made hereunder shall be paid by the Company to the Indemnitee
within twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company; provided, however, that, if and to the extent that
the Delaware General Corporation Law requires, an advancement of expenses
incurred by the Indemnitee in his capacity as a director or officer shall be
made only upon delivery of an undertaking by or on behalf of the Indemnitee to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that the
Indemnitee is not entitled to be indemnified for such expenses under this
Agreement or otherwise.
5. Maintenance of D&O Insurance.
(a) So long as the Indemnitee shall continue to serve in any capacity
described in Section 2 and thereafter so long as there is any reasonable
possibility that the Indemnitee shall be subject to any proceeding by reason of
the fact that the indemnitee served in any of such capacities, the Company will
use reasonable efforts to purchase and maintain in effect for the benefit of the
Indemnitee one or more valid, binding and enforceable policies of directors' and
officers' liability insurance ("D&O Insurance") providing, in all respects,
coverage and amounts as reasonably determined by the Board of Directors.
(b) Notwithstanding Section 5(a), the Company shall not be required
to maintain D&O Insurance if such is not reasonably available or if, in the
reasonable business judgment of the Board of Directors of the Company as it may
exist from time to time, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of insurance or (ii) the coverage
is so limited by exclusions that there is insufficient benefit provided by such
insurance.
6. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that the indemnification with respect thereto
properly may be sought from the Company under this Agreement, notify the Company
of the commencement or threat of commencement thereof. The failure to notify or
promptly notify the Company shall not relieve the Company from any liability
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which it may have to the Indemnitee otherwise than under this Agreement, and
shall relieve the Company from liability hereunder only to the extent the
Company has been prejudiced.
(b) If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 6(a), the Company has D&O Insurance in effect,
the Company shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the D&O Insurance
policy. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, to or on behalf of the Indemnitee, all amounts
payable as a result of such proceeding in accordance with the terms of such
policy.
(c) In the event the Company shall be obligated to pay the expenses
of the Indemnitee in connection with any proceeding, the Company shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel or other expenses subsequently incurred by the Indemnitee with respect
to the same proceeding; provided that (i) the Indemnitee shall have the right to
employ his own counsel in any such proceeding at the Indemnitee's expense and
(ii) if (A) the employment of counsel by the Indemnitee has been previously
authorized by the Company, or (B) the Indemnitee shall have reasonably concluded
that there is a conflict of interest between the Company and the Indemnitee in
the conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, the fees and expenses
of the Indemnitee's counsel shall be paid by the Company; and provided further
that the Company shall not be required to pay the expenses of more than one such
separate counsel for persons it is indemnifying in any one proceeding.
7. Determination of Right to Indemnification.
(a) To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 3 or in the
defense of any claim, issue or matter described therein, the Company shall
indemnify the Indemnitee pursuant to Section 3 against expenses actually and
reasonably incurred by him in connection with the investigation, defense, or
appeal of such proceeding. If the Indemnitee has not been successful on the
merits or otherwise in any such defense, the Company also shall indemnify the
Indemnitee pursuant to Section 3 unless, and only to the extent that, the
Indemnitee has not met the applicable standard of conduct under the Company's
Certificate of Incorporation required to entitle the Indemnitee to such
indemnification.
(b) Subject to the provisions of Section 8 relating to a Change in
Control (as defined therein), the determination as to whether the Indemnitee is
entitled to indemnification shall be made as follows: (1) if requested by the
Indemnitee, by Independent Legal Counsel selected by the Indemnitee with the
consent of the Company (which consent shall not be unreasonably withheld) or (2)
if no request is made by the Indemnitee for a determination by Independent Legal
Counsel, (i) by a quorum of the Board of Directors consisting of Disinterested
Directors or (ii) if such quorum is not obtainable or, even if obtainable, if a
quorum of Disinterested Directors so directs, by Independent Legal Counsel in a
written opinion. If Independent Legal Counsel shall make such
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determination, the Company agrees to pay the reasonable fees of such counsel and
to indemnify such counsel fully against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or counsel's engagement pursuant hereto.
(c) Notwithstanding a determination that the Indemnitee is not
entitled to indemnification with respect to a specific proceeding, the
Indemnitee shall have the right to apply to the court of Chancery of Delaware,
the court in which that proceeding is or was pending or any other court of
competent jurisdiction, for the purpose of enforcing the Indemnitee's right to
indemnification or the advance payment of expenses pursuant to this Agreement.
The burden of proof shall be on the Company in any such suit to demonstrate by
the weight of the evidence that the Indemnitee is not entitled to
indemnification or advance payment of expenses. The Indemnitee's expenses
incurred in successfully establishing his right to indemnification or
advancement of expenses, in whole or in part, in any such action (or settlement
thereof) shall be paid by the Company.
(d) Notwithstanding anything in Sections 3 or 4 to the contrary, the
Company shall not be liable under this Agreement to make any indemnity payment
or advancement of expenses in connection with any proceeding (i) to the extent
that payment is actually made, or for which payment is available, to or on
behalf of the Indemnitee under an insurance policy, except in respect of any
amount in excess of the limits of liability of such policy or any applicable
deductible under such policy; (ii) to the extent that payment has been or will
be made to the Indemnitee by the Company otherwise than pursuant to this
Agreement; or (iii) to the extent that there was a final adjunction by a court
of competent jurisdiction that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to indemnification under
the Delaware General Corporation Law as it now exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment).
8. Change In Control.
(a) The Company agrees that if there is a Change in Control, as
defined below, of the Company (other than a Change in Control which has been
approved by a majority of the members of the Board of Directors who were
directors immediately prior to such Change in Control), then with respect to all
matters thereafter arising concerning the rights of the Indemnitee to indemnity
payments and advance payments of expenses under this Agreement the Company shall
seek legal advice only from Independent Legal Counsel selected by the Indemnitee
with the consent of the Company (which shall not be unreasonably withheld).
Such counsel, among other things, shall render a written opinion to the Company
and the Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under this Agreement and applicable law. The
Company agrees to pay the reasonable fees of the Independent Legal Counsel and
to indemnify such counsel fully against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or counsel's engagement pursuant hereto.
(b) Alternatively, the Indemnitee may choose to submit all matters
arising concerning his rights to indemnity payments and advance payments of
expenses under this
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Agreement to a panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the third of whom is
selected by the first two arbitrators so selected. Any such submission shall be
governed by the Commercial Arbitration Rules of the American Arbitration
Association and shall be deemed to be a submission within the meaning of the
Federal Arbitration Act or any statutory modification or re-enactments thereof.
Arbitration proceedings shall take place in Chicago, Illinois, unless otherwise
agreed to by the parties.
(c) "Change in Control" for purposes of this Agreement shall be
deemed to have occurred if (a) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding voting
securities, except that a person who as of the date of this Agreement owns 20%
or more of the total voting power represented by the Company's outstanding
voting securities shall not be deemed to have caused a Change in Control, or (b)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-third (2/3) of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof, or (c) the stockholders of the
Company approve a merger, plan of complete liquidation of the Company, an
agreement for the sale or disposition by the Company of all or any substantial
part of the Company's assets, or other business combination of the Company with
any other corporation, other than a business combination which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such business combination.
9. Limitation of Actions and Release of Claims. No proceeding shall
be brought and no cause of action shall be asserted by the Company or any
subsidiary or by any stockholder on behalf of the Company or any subsidiary
against the Indemnitee, his spouse, heirs, estate, executors or administrators
after the expiration of one year from the act or omission of the Indemnitee upon
which such proceeding is based; provided, however, that in the event that the
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Indemnitee has fraudulently concealed the facts underlying such cause of action,
no proceeding shall be brought and no cause of action shall be asserted after
the expiration of one year from the earlier of (i) the date the Company or any
subsidiary of the Company discovers such facts or (ii) the date the Company or
any subsidiary of the Company could have discovered such facts by the exercise
of reasonable diligence. Any claim or cause of action of the Company or any
subsidiary of the Company, including claims predicated upon the negligent act or
omission of the Indemnitee, shall be extinguished and deemed released unless
asserted by filing of a legal action within such period. This Section 9 shall
not apply to any cause of action which has accrued on the date hereof and of
which
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the Indemnitee is aware on the date hereof but as to which the Company has no
actual knowledge apart from the Indemnitee's knowledge.
10. Non-exclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or By-Laws, the vote of the
Company's stockholders or Disinterested Directors, other agreements, or
otherwise, both as to administrators in his official capacity and to action in
another capacity while occupying his position as an agent of the Company, and
the Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
11. Settlement. The Company shall not be liable to indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of any
proceeding without its written consent, which consent shall not be unreasonably
withheld. The Company shall not settle any proceeding which would impose any
penalty or limitation on the Indemnitee without the Indemnitee's written
consent, which consent shall not be unreasonably withheld. In the event that
consent is not given and the parties hereto are unable to agree on a proposed
settlement, Independent Legal Counsel shall be retained by the Company, at its
expense, with the consent of the Indemnitee, which consent shall not be
unreasonably withheld, for the purpose of determining whether or not the
proposed settlement is reasonable under all the circumstances; and if
Independent Legal Counsel determines the proposed settlement is reasonable under
all the circumstances, the settlement may be consummated without the consent of
the other party.
12. Subrogation Rights. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee against any person or organization
and the Indemnitee shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights.
13. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the full extent now or hereafter not
prohibited by law. Indemnitee's rights hereunder shall apply to claims made
against Indemnitee arising out of acts or omissions which occurred prior to the
date hereof as well as those which occur after the date hereof.
14. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or unenforceable
and to give effect to Section 13.
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15. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
17. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) on
the date of delivery if delivered by hand or (ii) on the second business day
after being deposited in the U.S. mail (registered or express), postage prepaid.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice. Each party agrees to
receipt for any notice received promptly upon request.
18. Governing Law. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
19. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Delaware and the Company irrevocably consents to the jurisdiction of any court
in which an Indemnitee brings action pursuant to Section 7(c), for all purposes
in connection with any proceeding which arises out of or relates to this
Agreement. The Company agrees not to initiate any such action or proceeding in
any state other than Delaware.
20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement effective as of the date first above written.
XXXXXX XXXXXX VISIONCARE, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Its: Chief Financial Officer
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
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SCHEDULE OF OFFICERS & DIRECTORS
WHO SIGNED AN INDEMNIFICATION AGREEMENT
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1. Xxxxx X. Xxxx
2. Xxxxxx X. Xxxxxx
3. Raleigh X. Xxxxxxxx, Xx.
4. Xxxxxxxx X. Xxxxxx
5. Xxxxxxx X. Xxxxx
6. Xxxxxx X. Xxxx
7. Xxxxxx X. XxXxxxx
8. Xxxxxx X. Xxxxxxx
9. Xxxxxx X. Xxxxxxx
10. Xxxxxx X. Xxxxxx
11. Xxxxxxx X. Xxxxxxxx
12. Xxxx X. Xxxxxx
13. Xxxx X. Xxxx
14. Xxxx X. X'Xxxxxx
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