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EXHIBIT 10(i)
CONSULTING AGREEMENT
THIS AGREEMENT made this 2nd day of June, 2000, by and between XXXXXXX
X. XXXXXXXXX (the "Consultant") and XXXXXXX COMPANY, a Michigan corporation
having its corporate offices at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
("Perrigo").
WITNESSETH:
WHEREAS, Consultant has been a loyal and valuable executive officer of
Perrigo for many years and has peculiar and special knowledge regarding all
facets of the business of Xxxxxxx and the manner in which it is conducted; and
WHEREAS, Xxxxxxx desires to assure itself of the continued services of
Consultant as a consultant to assist the new President and Chief Executive
Officer in the performance of his duties on an as requested basis during the
term of this Agreement; and
WHEREAS, Consultant desires to be retained by Xxxxxxx as a consultant
under the terms and conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the services to be performed by
Consultant for Xxxxxxx and in further consideration of the mutual covenants and
agreements hereinafter set forth, Consultant and Xxxxxxx have agreed as follows:
1. Services. During the term of this Agreement, Consultant shall render
to Xxxxxxx, any successor corporation, affiliate or parent company of Xxxxxxx
such consulting and advisory services as shall be requested by the President and
Chief Executive Officer of Xxxxxxx that are consistent with the services
performed by Consultant while employed by Xxxxxxx.
Subject to Section 2 below, during the first eight (8) months of the
term of this Agreement Consultant shall provide consulting services to the
President and Chief Executive Officer on an as-requested basis, which services
shall be performed at all reasonable times.
Subject to Section 2 below, during the remainder of the term of this
Agreement, the consulting services shall be provided at the times and in the
manner, by telephone or in person, specified by Consultant.
2. Term. The term of this Agreement shall begin on the Effective Date
hereof and shall end two (2) years from such Effective Date.
3. Compensation.
(a) As an inducement to Consultant to enter into this Agreement and
accept the terms herein set forth, Xxxxxxx agrees to pay to Consultant a pro
rata portion of the Management Incentive bonus that Consultant would have earned
for fiscal year 2000 under Xxxxxxx'x
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Management Incentive Bonus Plan (the "Plan") had Consultant continued his
written consent of employment with Xxxxxxx through the payment dates provided
for in the Plan ("the MIB Bonus"). The pro rata bonus will be determined by
multiplying the MIB Bonus by a fraction, the numerator of which is 10 and the
denominator of which is 12. The pro rata bonus as determined pursuant to this
Section 3(a) shall be paid on the dates and in the proportionate amounts that
bonuses are paid to all other participants in the Plan for fiscal year 2000.
(b) During the term of this Agreement, Xxxxxxx shall pay and provide
to Consultant, for the services of Consultant under this Agreement, compensation
and benefits as follows:
(i) A consulting fee of Sixteen Thousand Six Hundred Sixty Eight
Dollars ($16,668.00) monthly shall be paid to Consultant during the two year
term of this Agreement commencing in May 2000.
(ii) A private health insurance policy shall be provided to
Consultant for the term of this Agreement that is comparable to the health
insurance coverage now provided to the executive officers of Xxxxxxx.
(c) During the term of this Agreement, Xxxxxxx shall provide to
Consultant office space and secretarial services in the area leased by it in the
Grand Rapids, Michigan area together with basic utility services (including
telephone service) copying and telecopying services, all at no cost to
Consultant; provided; however that (i) Consultant shall reimburse Xxxxxxx for
long distance charges incurred by him that were not in connection with business
conducted by him on behalf of Xxxxxxx and (ii) Consultant shall pay the full
cost of the secretarial services from and after October 1, 2001.
(d) In addition to the amounts payable pursuant to Section 3(a),
(b), and (c) above, Xxxxxxx shall reimburse Consultant for his other reasonable
out-of-pocket expenses incurred in the performance of his duties upon submission
by Consultant of appropriate documented expense reports.
(e) Consultant's existing stock options shall all become vested as
of May 1, 2000 and Consultant shall have a period of three (3) years, ending May
1, 2003, during which Consultant may exercise those options. In the event of a
termination of this Agreement pursuant to Section 5 (a) or (c) below,
Consultant, or his heirs, representatives, or assigns, in the event of his
death, shall have the right to exercise Consultants existing stock options for
the remainder of the period specified above.
(f) As long as Consultant remains on the Board of Directors of
Xxxxxxx, he shall receive the compensation in effect from time to time paid by
Xxxxxxx to its outside directors.
Consultant agrees that all perquisites and benefits provided to him as
an executive officer of Xxxxxxx ceased as of May 1, 2000.
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4. Xxxxxxx, (a) engage directly or indirectly, for himself or others,
in any activity or employment in the faithful performance of which it could be
reasonably anticipated that he would be required or expected to use or disclose
Confidential Information obtained by him prior to or during the term of this
Agreement, or (b) otherwise disclose such Confidential Information to any third
party except as necessary for the performance of his duties under this
Agreement.
The term "Confidential Information" shall mean and include methods,
processes, techniques, formulae, compounds, compositions, equipment, research
and development data, clinical and pharmacological data, marketing and sales
information, personnel data, customer or supplier lists, financial information
or data, strategic, operational, financial or other plans, computer hardware and
software, and all know-how and trade secrets which are in the possession of
Xxxxxxx, its subsidiaries, or any company affiliated with Xxxxxxx, and which
have not been published or disclosed to the general public.
In consideration of the agreements set forth in Section 3 above,
Consultant agrees to execute a Noncompetition and Nondisclosure Agreement in the
form attached as Exhibit A.
5. Termination. This Agreement may be terminated by:
(a) The expiration of the term of this Agreement pursuant to
Section 2 above.
(b) Mutual written agreement of Consultant and Xxxxxxx.
(c) Xxxxxxx upon the death of Consultant.
(d) Xxxxxxx upon the refusal of Consultant to make himself
reasonably available for the consulting services to be rendered hereunder during
the term of this Agreement.
(e) Xxxxxxx upon a material violation by Consultant of any of the
material covenants contained herein.
(f) Xxxxxxx in the event of Consultant's dishonesty or willful
misconduct.
In the event this Agreement is terminated, the rights of Consultant to
payments hereunder shall immediately terminate for any payment that becomes due
and owing after the date of termination. Xxxxxxx'x rights of termination shall
be without prejudice to its other legal remedies. Consultant's obligations under
Section 4 hereof shall survive expiration or termination of this Agreement.
6. Relationship of the Parties. The relationship between Xxxxxxx and
Consultant will be that of principal and agent; provided, however, that except
as otherwise provided by Xxxxxxx in writing, Consultant is not granted authority
to assume or create any obligation or responsibility, express or implied, on
behalf of or in the name of Xxxxxxx, or to bind Xxxxxxx in any manner
whatsoever. As a consultant, Consultant will not participate in any of the
employee benefit plans offered by Xxxxxxx and Xxxxxxx shall not withhold any
local, state, or federal taxes from the payments made to Consultant under this
Agreement, all tax liability in respect of
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Consultant's receipt of compensation hereunder being the sole and exclusive
responsibility of Consultant.
7. Indemnification. In connection with the performance of his duties
hereunder, Consultant shall be entitled to indemnification as an agent of
Xxxxxxx to the full extent required or provided for by (a) the Business
Corporation Law of the State of Michigan; (b) the Articles of Incorporation and
By-laws of Xxxxxxx; and (c) the terms of the attached Indemnity Agreement.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered or mailed postage
prepaid:
(a) If to Consultant:
Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxxx X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
(b) If to Perrigo:
Xxxxxxx Company
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
9. Entire Agreement. This document contains the entire agreement
between Consultant and Perrigo concerning the subject matter hereof and it may
not be changed orally, but only by agreement in writing, executed by Consultant
and Xxxxxxx.
10. Governing Law. This Agreement and the performance hereunder shall
be construed in accordance with the laws of the State of Michigan.
11. Effective Date. The "Effective Date" of this Agreement shall be May
1, 2000.
XXXXXXX COMPANY,
a Michigan corporation
By:
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Its:
--------------------
CONSULTANT:
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Xxxxxxx X. Xxxxxxxxx
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NONCOMPETITION AND NONDISCLOSURE AGREEMENT
THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT ("Agreement") entered
into on June 2, 2000, by and between PERRIGO COMPANY, a Michigan corporation,
for and in behalf of itself and each of its subsidiary and affiliated companies
(collectively referred to "Xxxxxxx" or the "Company"), and XXXXXXX X. XXXXXXXXX
(referred to as "Consultant").
WITNESSETH:
WHEREAS, Xxxxxxx'x special competence in its various fields of endeavor
is the secret of its growth, and such growth depends to a significant degree on
Xxxxxxx'x confidential, proprietary information. This information that is not
generally known to others and includes more and better information that our
competitors have about research, development, production, marketing and
management in the manufacture, preparation, handling, treatment, storage, sale,
distribution, shipment and use of products for the Store and Value Brand Product
(as herein defined) ("Company Business"). To obtain such information and use it
successfully, Xxxxxxx spends considerable sums of money in product development,
the development of marketing methods, training its employees, and service to its
customers; and
WHEREAS, Consultant has entered into a Consulting Agreement with
Xxxxxxx. In connection with providing such consulting services, Consultant has
obtained or will obtain access to sensitive information regarding the Company
Business and its customers. The parties agree that improper disclosure or use of
that information will cause series and irreparable harm to the Company; and
WHEREAS, Xxxxxxx has agreed to cause all of Consultant's existing stock
options to vest as of May 1, 2000 and to extend to Consultant a period of two
(2) years, ending May 1, 2002, during which Consultant may exercise those
options; and
WHEREAS, on the date hereof Consultant has entered into a Consulting
Agreement and has further agreed as a condition of Xxxxxxx entering into the
Consulting Agreement and this Noncompetition and Nondisclosure Agreement to not
compete with Xxxxxxx;
NOW, THEREFORE, in consideration for the vesting of all of Consultant's
existing stock options, the extension of Consultant's time to exercise those
stock options to May 1, 2003 and for other good and valuable consideration, the
receipt of which is acknowledged, the parties agree as follows:
12. Restriction on Competing Activities. During the term of
Consultant's Consulting Agreement (May 1, 2000 through May 1, 2002), Consultant
will not, directly or indirectly, alone or as a partner, officer, director,
owner, employee or consultant of any business or other entity, be engaged in any
business or other enterprise that competes, directly or indirectly, with the
Company Business without the express written consent of the Board of Directors
of Xxxxxxx.
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13. Restriction on Post-Consultant Activities. For a period of two (2)
years following the expiration of the Consulting Agreement, Consultant shall
not, directly or indirectly, alone or as a partner, director, officer, owner,
employee or consultant of any business or other entity, compete in any way with
the Company Business. In addition to its plain meaning and understanding,
"compete in any way with the Company Business" shall specifically include
engaging in any way in the production, distribution or sale of any Store and
Value Brand Products that are similar to or competitive with those now or
hereafter produced, distributed or sold by Xxxxxxx. As used in this Agreement,
"Store and Value Brand Products" means those products that are supplied by a
manufacturer or marketer through channels of distribution (including, but not
limited to, wholesalers, distributors and retailers) that bear either (i) a
label or brand name that is not regularly advertised by national broadcast,
print, direct mail or other media for the purpose of establishing brand name
recognition of the manufacturer, marketer and/or distributor with the general
public.
Consultant also agrees that during this two-year period, he will not,
directly or indirectly, either for himself or any other person, solicit or
induce, or attempt to solicit or induce, any individual who is an employee,
independent contractor, supplier or customer of Xxxxxxx to terminate his, her or
its business relationship with the Company or in any way interfere with or
disrupt the Company's relationship with any of its employees, independent
contractors, suppliers or customers.
14. Nondisclosure. Consultant will not during or at any time after the
termination of his consulting relationship with Xxxxxxx use, divulge or convey
to others any secret or confidential information, knowledge or data of Xxxxxxx
or that of third parties obtained by Consultant during the period of consulting
for Xxxxxxx. Such secret or confidential information, knowledge or data
includes, but is not limited to, secrete or confidential matters:
(a) Of a technical nature such as, but not limited to, methods,
know-how, formulas, compositions, processes, discoveries, machines, inventions,
computer programs and similar items or research projects;
(b) Of a business nature such as, but not limited to, information
about costs, purchasing, profits, marketing, sales or lists of customers; and
(c) Pertaining to future developments such as, but not limited to,
research and development or future marketing or merchandising.
15. Return of Company Property. Upon termination of the Consulting
Agreement with Xxxxxxx, or at any other time at Xxxxxxx'x request, Consultant
agrees:
(a) To deliver promptly to Xxxxxxx all manuals, letters, notes,
papers, books, reports, sketches, computer data or disks, files and programs,
price lists, customer files, memoranda, contracts and agreements, business and
marketing plans, product formulations, manufacturing processes, procedures and
methods (including equipment specifications and drawings), vendor lists, vendor
files, customer lists, stored or recorded documents, and all other materials and
copies thereof relating in any way to the Company Business and in any way
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obtained by Consultant during the period of employment with Xxxxxxx which are in
Consultant's possession or under his control. Consultant further agrees that he
will not make or retain any copies of any of the foregoing and will so represent
to Xxxxxxx upon termination of employment.
(b) To confirm to Xxxxxxx that all of Xxxxxxx'x computer records,
files and programs have first been turned over to Xxxxxxx and then deleted or
erased from all computer equipment owned, leased or used by Consultant.
(c) To return to Xxxxxxx all personal property provided for
Consultant's use during his consulting with Xxxxxxx including, but not limited
to, automobiles, computers and related equipment, telephones, credit cards,
security cards and identifications, keys and tools.
16. Remedies. Consultant acknowledges and agrees that monetary damages
for his breach of any provision of this Agreement would be an inadequate remedy
and that the Company would not have an adequate remedy at law for such breach.
Accordingly, Consultant agrees that, in addition to all other rights and
remedies available to the Company to enforce its rights pursuant to this
Agreement, the Company shall, without the necessity of proving irreparable harm
or of posting a bond, be entitled to such equitable relief from any court with
proper jurisdiction, including, but not limited to, an injunction, a temporary
restraining order, or an order for specific performance, as may be necessary to
enforce or prevent a violation (whether anticipatory, continuing or future) of
any provision of this Agreement. If Consultant breaches any provision of this
Agreement, he shall pay all expenses, including court costs and actual attorney
fees, incurred by the Company in enforcing such provision.
17. Enforceability. The unenforceability of any provision or portion of
any provision of this Agreement shall not affect the enforceability of the
remaining provisions or the remainder of any provision of this Agreement. If at
any time a court determines that any restrictive covenant contained in this
Agreement is unreasonable, the parties agree that the maximum restriction
permitted by law shall be substituted for the stated restriction and that such
substitution shall govern this Agreement as if originally part of this
Agreement.
18. Binding Effect. This Agreement and the rights and obligations of
Xxxxxxx hereunder shall inure to the benefit of and be binding upon Xxxxxxx and
its successors and assigns.
19. Entire Agreement Modifications. This Agreement contains the entire
agreement between the parties with respect to its subject matter and supersedes
all other agreements, whether oral or written, between the parties regarding
such subject matter. This Agreement may be modified or terminated only through a
written instrument signed by each of the parties.
20. Waiver. The waiver by either party of the enforcement or the breach
of any provision of this Agreement shall not operate or be construed as a
subsequent or continuing waiver of the enforcement or the breach of any
provision. The failure by either party to insist upon strict compliance of any
provision of this Agreement shall not be deemed a waiver of such provision. No
waiver shall be valid unless in writing and signed by the party giving the
waiver.
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21. Governing Law. This Agreement shall be enforced, governed and
construed by the laws of the State of Michigan, regardless of the fact that
either of the parties may be or become a resident of another state.
The parties have executed this Agreement as of the date first appearing
above.
XXXXXXX COMPANY
By:
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Its:
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CONSULTANT:
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Xxxxxxx X. Xxxxxxxxx
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INDEMNITY AGREEMENT
This Agreement is entered into this 2nd day of June, 2000, effective as
of May 1, 2000, by and between PERRIGO COMPANY, a Michigan corporation (the
"Company"), 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and Xxxxxxx X.
Xxxxxxxxx ("Indemnitee"), whose address is 0000 Xxxxxxxxxx X.X., Xxxxx Xxxxxx,
Xxxxxxxx 00000.
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation evidenced by
present trends subjects directors and officers to expensive litigation risks at
the same time that the cost of directors' and officers' liability insurance has
steadily increased and its availability has been severely limited; and
WHEREAS, it is now and has always been the express policy of the
Company to indemnify its directors and officers so as to provide them with the
maximum possible protection permitted by law; and
WHEREAS, Indemnitee has terminated his employment with the Company and
his position as an officer of Company but will continue to consult with the
Company for a period of two years in order to help the new President and Chief
Executive Officer with the transition into his position; and
WHEREAS, the Company believes it is appropriate and in the best
interest of the Company to indemnify Indemnitee in connection with the
consulting services provided by him to the Company during the two year term of
his consulting arrangement in addition to the indemnification protection now
provided to him as a director of the Company;
WHEREAS, the Act (as defined below) permits the Company to
contractually commit itself to increase the scope of indemnification beyond the
indemnification rights provided for in the Act and the Company has determined
under the circumstances that it is reasonable and necessary and in the best
interest of the Company and its shareholders to do so in the case of Indemnitee
in order to assure an orderly transition of his duties to the Company's new
President and Chief Executive Officer during the next two years.
NOW, THEREFORE, the parties agree as follows:
SECTION 1 Definitions. As used in this Agreement:
(a) "Act" means the Michigan Business Corporation Act in existence
on the date of this Agreement.
(b) "Change in Control" means a change in control of the Company
after the effective date of this Agreement of a nature that would be required to
be reported in response to Item 6(e)
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of Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act, whether
or not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the effective date of this Agreement (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 20 percent or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least eighty percent (80%) of the members of
the Board in office immediately prior to such person attaining such percentage
interest; (ii) the Company is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of which members
of the Board in office immediately prior to such transaction or event constitute
less than a majority of the Board thereafter; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least eighty percent (80%) of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board.
(c) "Corporate Position" means the position of a person as a
director, officer, employee, agent or fiduciary of or as a consultant to the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
request of the Company.
(d) "Disinterested Director" means a director of the Company who is
not and was not a party to or threatened to be made a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
(e) "Expenses" shall mean all costs, expenses, and obligations paid
or incurred in connection with investigating, litigating, being a witness in,
defending or participating in, or preparing to litigate, defend, be a witness in
or participate in any matter that is the subject of a Proceeding, including
attorneys' and accountants' fees and court costs.
(f) "Independent Committee of the Board" means a committee of two or
more Disinterested Directors appointed by the Board of Directors of the Company
to determine the right of Indemnitee to be indemnified pursuant to the terms of
this Agreement and to act upon all other issues and matters relating to such
indemnification.
(g) "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 Indemnitee in any matter material to either such party, or (ii) any other
party to the Proceeding 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.
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(h) "Independent Director" means a director of the Company
designated as an independent director pursuant to Section 450.1505(3) of the
Michigan Business Corporation Act now in effect.
(i) "Proceeding" shall mean any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether brought by
or in the right of the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature, in which Indemnitee may be or may have
been involved as a party or otherwise by reason of the fact that Indemnitee held
or holds a Corporate Position, or by reason of any action taken by Indemnitee or
any inaction on Indemnitee's part while acting in a Corporate Position, or by
reason of the fact that Indemnitee is or was serving at the request of the
Company in a Corporate Position of another corporation, or as a member, agent or
fiduciary of a partnership, joint venture, trust or other enterprise.
(j) "Resolution Costs" shall mean any amount, fine or penalty paid
or payable by Indemnitee in satisfaction of a final judgment entered by a court
of competent jurisdiction in any Proceeding or in settlement of any such
Proceeding.
(k) "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
SECTION 2 Agreement to Serve. Indemnitee agrees to serve as a
consultant to the Company for the period and subject to the terms set forth in a
Consulting Agreement entered into on the execution date of this Agreement.
SECTION 3 Indemnification.
(a) In any Proceeding other than a Proceeding by or in the right of
the Company, the Company shall indemnify Indemnitee against all Expenses and
Resolution Costs actually and reasonably incurred by Indemnitee in connection
with such Proceeding. Notwithstanding the preceding but subject to Section 4
below, no indemnification shall be made under this subsection unless otherwise
determined or directed by the court in which such proceeding was brought:
(i) with respect to remuneration paid to Indemnitee if it shall
be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(ii) on account of any suit in which a final judgment or other
final adjudication is rendered against Indemnitee for an accounting of profits
made from the purchase or sale by Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act and
amendments thereto or similar provisions of any federal, state or local law;
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(iii) on account of Indemnitee's conduct which is determined by
a final judgment or other final adjudication to have been knowingly fraudulent,
deliberately dishonest or willfully wrong;
(iv) on account of Indemnitee's conduct which by a final
judgment or other final adjudication is determined to have been in bad faith and
in opposition to the best interests of the Company or to have produced an
unlawful personal benefit; or
(v) with respect to a criminal proceeding if the Indemnitee knew
or reasonably should have known that Indemnitee's conduct was illegal.
(b) The Company shall indemnify Indemnitee in accordance with the
provisions of this subsection (b) if Indemnitee is a party to or threatened to
be made a party to or otherwise involved in any Proceeding by or in the right of
the Company to procure a judgment in its favor by reason of the fact that
Indemnitee held or holds a Corporate Position, against all Expenses actually and
reasonably incurred by Indemnitee and any Resolution Costs paid by Indemnitee in
settlement of such Proceeding, but only if Indemnitee acted in good faith and in
a manner which Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company. Notwithstanding the preceding but subject to
Section 4 below, no indemnification shall be made under this subsection (b) in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged to be liable to the Company in the performance of his duty to
the Company, unless and then only to the extent that any court in which such
proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for such amount
of Expenses as such court shall deem proper.
(c) In addition to any indemnification provided under subsection (a)
and (b) above, the Company shall indemnify Indemnitee against any Expenses
and/or Resolution Costs incurred by Indemnitee, regardless of the nature of the
Proceeding in which Expenses and/or Resolution Costs were incurred, if such
Expenses or Resolution Costs would have been covered under the directors' and
officers' liability insurance policies in effect on the effective date of this
Agreement or under any such insurance policies which become effective on any
subsequent date.
(d) The indemnification contemplated by this Agreement shall be to
the fullest extent now or hereafter allowed by law (whether statutory or common
law) as presently or hereafter enacted or interpreted. In this connection, if a
change in the Act or in the statutory laws of any other state under which the
Company, or its successor, is hereafter incorporated or to which its corporate
offices are hereafter located or relocated permits greater or lesser
indemnification, either by agreement or otherwise, than currently provided by
the Act or this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change or prior to such change, as the case may be.
SECTION 4 Mandatory Advancement of Expenses. Notwithstanding anything
in this Agreement expressed or implied to the contrary, the Company shall
advance all reasonable Expenses incurred by or on behalf of Indemnitee in
connection with any Proceeding within
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thirty (30) days after the receipt by the Company of a statement or statements
from time to time submitted by Indemnitee requesting such advance or advances,
whether prior to or after final disposition of such Proceeding. Such statement
or statements shall reasonably evidence the Expenses incurred by Indemnitee and
shall include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be determined
by a final order of a court of competent jurisdiction that Indemnitee is not
entitled to be indemnified against such Expenses under this Agreement in which
event the amounts so advanced shall be repaid to the Company.
SECTION 5 Procedure for Determination of Entitlement to Indemnification
for Resolution Costs.
(a) To obtain indemnification under this Agreement for Resolution
Costs, Indemnitee shall submit to the Company a written request, including such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine pursuant to subsection (b) below whether and
to what extent Indemnitee is entitled to indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant
to subsection (a) above, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto, shall be made in each specific case
as follows:
(i) if a Change in Control shall have occurred, the
determination shall be made by Independent Counsel who shall be selected in the
manner provided in Section 5(c)(ii) below. In the alternative and at
Indemnitee's sole option, Indemnitee shall have the right to direct that such
determination be made in the manner provided in the following subparagraph (ii)
of this subsection (b); and
(ii) if a Change in Control shall not have occurred or if
otherwise directed by Indemnitee pursuant to subsection (b)(i) above, the
determination shall be made by the Board by a majority vote of a quorum of the
Board consisting of Disinterested Directors, provided, however, that if a quorum
of the Board consisting solely of Disinterested Directors is not obtainable
then, at the option of the Board, by a majority vote of a quorum of all of the
directors (whether or not disinterested), such determination shall be made by
(A) majority vote of a committee of two or more Disinterested Directors
appointed by the Board, or (B) all Independent Directors, or (C) Independent
Counsel, or (D) the stockholders of the Company.
If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within thirty (30) days
after such determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in connection with the making of such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby agrees
to indemnify and hold Indemnitee harmless therefrom. A determination by the
Independent Directors or Independent Counsel shall be expressed in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee.
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(c) If the determination of entitlement to indemnification is to be
made by Independent Counsel, the Independent Counsel shall be selected as
follows:
(i) if a Change in Control shall not have occurred, the
Independent Counsel shall be selected by the Board, or
(ii) if a Change in Control shall have occurred, the Independent
Counsel shall be selected by Indemnitee.
The party selecting Independent Counsel shall advise the other
party in writing of the identity of the Independent Counsel so selected. The
Company shall pay any and all fees and expenses incurred by such Independent
Counsel and otherwise incident to the procedures of this Section 5, regardless
of the manner in which such Independent Counsel was selected or appointed.
SECTION 6 Presumptions and Effect of Certain Proceedings.
(a) If a Change in Control shall have occurred, the person or
persons making a determination with respect to entitlement to indemnification
shall presume that Indemnitee is entitled to indemnification under this
Agreement, and the Company shall have the burden of proof to overcome that
presumption.
(b) If the person or persons empowered or selected to determine
whether Indemnitee is entitled to indemnification shall not have made a
determination within sixty (60) days after being selected or empowered to do so
(or within ninety (90) days thereafter, if such determination is to be made by
the stockholders), the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, unless such indemnification is specifically prohibited under
applicable law.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or by a plea of
nolo contendere or its equivalent, shall not of itself adversely affect the
right of Indemnitee to indemnification or create a presumption that Indemnitee
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that his
conduct was unlawful.
SECTION 7 Remedies of Indemnitee.
(a) The Indemnitee shall be entitled to an adjudication of his right
to indemnification or to the advancement of Expenses, at his sole option, (i) by
the Circuit Court for the County of Kent or Allegan, State of Michigan, or any
other court of competent jurisdiction, or (ii) by a
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single arbitrator in an arbitration conducted pursuant to the rules of the
American Arbitration Association, if:
(i) a determination has been made pursuant to Section 5 that the
Indemnitee is not entitled to indemnification for Resolution Costs;
(ii) the determination of his entitlement to indemnification is
not timely made pursuant to Section 5;
(iii) advancement of Expenses is not timely made pursuant to
Section 4; or
(iv) payment of indemnification to which Indemnitee is entitled
under Section 9 below is not timely made or payment is not timely made after a
determination has been made that Indemnitee is entitled to indemnification.
The Company shall not oppose Indemnitee's right to seek any such
adjudication, whether in a court or in arbitration.
(b) If a determination shall have been made that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 7 shall be conducted in all respects, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If a
Change in Control shall have occurred, then, in any judicial proceeding or
arbitration commenced pursuant to this Section 7, the Company shall have the
burden of proving that Indemnitee is not entitled to indemnification.
(c) If a determination shall have been made that Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding or arbitration commenced pursuant to this Section 7,
unless such indemnification is prohibited under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 7 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) If Indemnitee, pursuant to this Section 7, seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all expenses (of the types described in the definition of Expenses) actually
and reasonably incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in the judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of Expenses sought, the expenses
incurred by Indemnitee in connection with such judicial
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adjudication or arbitration shall be appropriately prorated between the Company
and the Indemnitee.
SECTION 8 Insurance; Subrogation.
(a) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of or consultants to the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves in a Corporate Position at the request of
the Company (the "D & O Policy"), Indemnitee shall be covered by the D & O
Policy or Policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(b) If the Company makes any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(c) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
SECTION 9 Partial Indemnification; Successful Defense. If Indemnitee is
entitled under any provision of this Agreement to indemnification by the Company
for some or a portion of the Expenses actually and reasonably incurred by
Indemnitee or for Resolution Costs but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such Expenses or Resolution Costs to which Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, expressed or implied to
the contrary, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all claims relating in whole or in part to a
Proceeding or in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all Expenses incurred
in connection therewith.
SECTION 10 Consent. Unless and until a Change in Control has occurred,
the Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding made without the Company's
written consent. Following a Change in Control, such consent shall not be
required. The Company shall not settle any Proceeding in any manner which would
impose any penalty or limitation on Indemnitee without Indemnitee's written
consent. Neither the Company nor the Indemnitee will unreasonably withhold their
consent to any proposed settlement.
SECTION 11 Indemnification Hereunder Not Exclusive. The indemnification
provided by this Agreement shall be in addition to any other rights to which
Indemnitee may be entitled under the Articles of Incorporation, the Bylaws, any
agreement, any vote of
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shareholders or disinterested directors, the Act as amended from time to time,
or otherwise, both as to actions in Indemnitee's official capacity as a
consultant to and director of the Company and as to actions in another capacity
while holding such positions.
SECTION 12 Severability. If this Agreement or any portion hereof
(including any provision within a single section, subsection or sentence) shall
be held to be invalid, void or otherwise unenforceable on any ground by any
court of competent jurisdiction, the Company shall nevertheless indemnify
Indemnitee as to any Expenses or Resolution Costs with respect to any Proceeding
to the full extent permitted by law or any applicable portion of this Agreement
that shall not have been invalidated, declared void or otherwise held to be
unenforceable.
SECTION 13 No Presumption. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court had determined that indemnification is not
permitted by applicable law.
SECTION 14 Notice. Indemnitee shall, as a condition precedent to
Indemnitee's right to be indemnified under this Agreement, give to the Company
notice in writing as soon as practicable of any claim for which indemnity will
or could be sought under this Agreement. Notice to the Company shall be directed
to the Company's corporate offices at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, Attention: Secretary (or to such other individual or address as the
Company shall designate in writing to Indemnitee). Notice shall be deemed
received three (3) days after the date postmarked if sent by prepaid mail
properly addressed. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power to give.
SECTION 15 Continuation of Indemnification. The indemnification rights
provided to Indemnitee under this Agreement, including the right provided under
Sections 3, 4 and 5 above, shall continue after Indemnitee has ceased to hold a
Corporate Position.
SECTION 16 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company, and its successors and assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business or assets of the Company,
and of Indemnitee and the spouse, heirs, assigns and personal and legal
representatives of Indemnitee.
SECTION 17 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Michigan applicable to
contracts made and to be performed in such state without giving effects to the
principles of conflicts of laws.
SECTION 18 Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers' liability
insurance, Indemnitee shall
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be covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any one else who holds a
Corporate Position.
SECTION 19 Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, assigns
or personal or legal representatives after the expiration of two (2) years from
the date of accrual of such cause of action, and any claim or cause of action of
the Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two (2) year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period shall govern.
SECTION 20 Amendments; 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 provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
COMPANY
ATTEST: XXXXXXX COMPANY
By
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Xxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Its: Secretary Its: President and CEO
INDEMNITEE
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Xxxxxxx X. Xxxxxxxxx
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