1
Exhibit 10.16
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") dated as
of_______________ is by and between PHARMERICA, INC., a Delaware corporation
(the "Company"), and ___________ ("Director").
R E C I T A L S
A. Director is a member of the Board of Directors of the Company and in
such capacity is performing a valuable service to the Company.
B. The Certificate of Incorporation of the Company (the "Certificate")
provides that the Company shall indemnify the directors of the Company, and may
indemnify the officers, employees and agents of the Company, to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law (the
"Corporation Law").
C. The Corporation Law specifically provides that indemnification and
advancement of expenses provided in such statute shall not be exclusive of any
other rights under any agreement, and thereby contemplates that agreements may
be entered into between the Company and members of the Board of Directors of the
Company with respect to the indemnification of such directors.
D. In order to induce Director to serve as a member of the Board of
Directors of the Company for the current term and for any subsequent term to
which he is elected by the stockholders of the Company, the Company has deemed
it to be in its best interest to enter into this Agreement with Director.
NOW, THEREFORE, in consideration of Director's agreement to serve as a
member of the Board of Directors of the Company after the date hereof, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, capitalized terms not
otherwise defined will have the meaning ascribed to them in Section 26 below.
2. Indemnification of Director. The Company hereby agrees that it shall
hold harmless and indemnify Director to the fullest extent authorized and
permitted by the provisions of the Certificate and By-Laws of the Company (the
"By-Laws") and the provisions of the Corporation Law, or by any amendment
thereof, but in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than the
Certificate, By-Laws or Corporation Law permits the Company to provide prior to
such amendment, or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date hereof.
2
3. Insurance.
3.1 Insurance Policies. So long as Director may be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that Director is or was a director, to the extent that the Company
maintains one or more insurance policy or policies providing directors' and
officers' liability insurance, Director shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage applicable to any director or officer then serving the Company.
3.2 Maintenance of Insurance. The Company shall not be
required to maintain the insurance or any policy or policies of comparable
insurance, as the case may be, if such insurance is not reasonably available or
if, in the reasonable business judgment of the Board of Directors of the Company
which shall be conclusively established by such determination by the Board of
Directors, or any appropriate committee thereof, either (i) the premium cost for
such insurance is disproportionate to the amount of coverage thereunder or (ii)
the coverage provided by such insurance is so limited by exclusions that there
is insufficient benefit from such insurance.
4. Additional Indemnification. Subject only to the exclusions set forth
in Section 5 hereof, the Company hereby agrees that it shall hold harmless and
indemnify Director:
(a) against any and all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Director in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or on behalf of
stockholders of the Company or by or in the right of the Company, to
which Director is, was or at any time becomes a party, or is threatened
to be made a party, by reason of the fact that Director is, was or at
any time becomes a director, officer, employee or agent of the Company,
or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Director by the Company under the non-exclusivity provisions of the
Corporation Law.
5. Limitations on Additional Indemnification. No indemnification
pursuant to this Agreement shall be paid by the Company:
(a) in respect to any transaction if it shall be determined by
the Reviewing Party, or by final judgment or other final adjudication,
that Director derived an improper personal benefit;
2
3
(b) in respect to the return by Director of any remuneration
paid to Director if it shall be determined by the Reviewing Party, or
by final judgment or other final adjudication, that such remuneration
was not approved by the stockholders of the Company and was thereby in
violation of law;
(c) on account of Director's conduct which is determined by
the Reviewing Party, or by final judgment or other final adjudication,
to have involved acts or omissions not in good faith, intentional
misconduct or a knowing violation of law; and
(d) if the Reviewing Party or a court having jurisdiction in
the matter shall determine that such indemnification is in violation of
the Certificate, the By-Laws or the law.
6. Advancement of Expenses. In the event of any threatened or pending
action, suit or proceeding in which Director is a party or is involved and which
may give rise to a right of indemnification under this Agreement, following
written request to the Company by Director, the Company shall promptly pay to
Director amounts to cover expenses incurred by Director in such proceeding in
advance of its final disposition upon the receipt by the Company of (i) a
written undertaking executed by or on behalf of Director to repay the advance if
it shall ultimately be determined that Director is not entitled to be
indemnified by the Company as provided in this Agreement and (ii) satisfactory
evidence as to the amount of such expenses.
7. Repayment of Expenses. Director agrees that Director shall reimburse
the Company for all reasonable expenses paid by the Company in defending any
civil, criminal, administrative or investigative action, suit or proceeding
against Director in the event and only to the extent that it shall be determined
by final judgment or other final adjudication that Director is not entitled to
be indemnified by the Company for such expenses under the provisions of the
Corporation Law or any applicable law.
8. Determination of Indemnification; Burden of Proof. With respect to
all matters concerning the rights of Director to indemnification and payment of
expenses under this Agreement or under the provisions of the Certificate and
By-Laws now or hereafter in effect, the Company shall appoint a Reviewing Party
and any determination by the Reviewing Party shall be conclusive and binding on
the Company and Director. If under applicable law, the entitlement of Director
to be indemnified under this Agreement depends on whether a standard of conduct
has been met, the burden of proof of establishing that Director did not act in
accordance with such standard of conduct shall rest with the Company. Director
shall be presumed to have acted in accordance with such standard and entitled to
indemnification or advancement of expenses hereunder, as the case may be,
unless, based upon a preponderance of the evidence, it shall be determined by
the Reviewing Party that Director did not meet such standard. For purposes of
this Agreement, unless otherwise expressly stated herein, the termination of any
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 Director did not meet any
particular standard of
3
4
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
9. Effect of Change in Control. If there has not been a Change in
Control after the date of this Agreement, the determination of (i) the rights of
Director to indemnification and payment of expenses under this Agreement or
under the provisions of the Certificate and the By-Laws, (ii) standard of
conduct and (iii) evaluation of the reasonableness of amounts claimed by
Director shall be made by the Reviewing Party or such other body or persons as
may be permitted by the Corporation Law. If there has been a Change in Control
after the date of this Agreement, such determination and evaluation may instead
be made by a special, independent counsel who is retained by Director and
approved by the Company, which approval shall not be unreasonably withheld, and
who has not otherwise performed services for Director or the Company.
10. Continuation of Indemnification. All agreements and obligations of
the Company contained herein shall continue during the period that Director is
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of the Company or serving in any other capacity referred to
herein.
11. Notification and Defense of Claim. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director shall, if a claim in respect hereof is to be made against the Company
under this Agreement, notify the Company in writing of the commencement thereof;
provided, however, that a reasonable and insignificant delay in so notifying the
Company shall not constitute a waiver of release by Director of rights hereunder
and that omission by Director to so notify the Company shall not relieve the
Company from any liability which it may have to Director otherwise than under
this Agreement. With respect to any such action, suit or proceeding as to which
Director notifies the Company of the commencement thereof:
(a) The Company shall be entitled to participate therein at
its own expense;
(b) Except as otherwise provided below, to the extent that it
may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof and
to employ counsel reasonably satisfactory to Director. After notice
from the Company to Director of its election to so assume the defense
thereof, the Company shall not be liable to Director under this
Agreement for any legal or other expenses subsequently incurred by
Director in connection with the defense thereof other than as otherwise
expressly provided below. Director shall have the right to employ
counsel of his own choosing in such action, suit or proceeding but the
fees and expenses of such counsel incurred after notice from the
Company of assumption by the Company of the defense thereof shall be at
the expense of Director unless (i) the employment of counsel by
Director
4
5
has been specifically authorized by the Company, such authorization to
be conclusively established by action by disinterested members of the
Board of Directors though less than a quorum; (ii) representation by
the same counsel of both Director and the Company would, in the
reasonable judgment of Director and the Company, be inappropriate due
to an actual or potential conflict of interest between the Company and
Director in the conduct of the defense of such action, such conflict of
interest to be conclusively established by an opinion of such counsel
to the Company to such effect; or (iii) the Company shall not in fact
have employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of counsel shall be paid by the
Company; provided that the Company reasonably approves of Director's
choice of counsel. The Company shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
the Company or as to which a conflict of interest has been established
as provided in (ii) hereof. Notwithstanding the foregoing, and subject
to the governing instruments of applicable insurance coverages, if an
insurance company has supplied directors' and officers' liability
insurance covering an action, suit or proceeding, then such insurance
company shall employ counsel to conduct the defense of such action,
suit or proceeding unless Director and the Company reasonably concur in
writing that such counsel is unacceptable; and
(c) The Company shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any
liability or penalty on Director without Director's written consent.
Neither the Company nor Director shall unreasonably withhold consent to
any proposed settlement.
12. Enforcement.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on the
Company hereby in order to induce Director to serve as a director of
the Company and acknowledges that Director is relying upon this
Agreement in continuing in such capacity.
(b) If a claim for indemnification or advancement of expenses
is not paid in full by the Company within thirty (30) days after a
written claim by Director has been received by the Company (which claim
sets forth the exact amount of such indemnification or advancement and
provides reasonably suitable evidence of the incurrence of such
amount), Director may at any time assert the claim and bring suit
against the Company to recover the unpaid amount of the claim. In the
event Director is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such
action, the Company shall reimburse Director for all of Director's
reasonable attorneys' fees and expenses in bringing and pursuing such
action.
13. Proceedings by Director. The Company shall not be liable to make
any payment under this Agreement in connection with any action, suit or
proceeding, or any part thereof, initiated
5
6
by Director unless such action, suit or proceeding, or part thereof (i) was
authorized by the Company, such authorization to be conclusively established by
action by disinterested members of the Board of Directors though less than a
quorum or (ii) was brought by Director pursuant to Section 12(b) hereof.
14. Effectiveness. This Agreement is effective for, and shall apply to,
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no action, suit or proceeding has been brought
prior to the date hereof and (ii) any action, suit or proceeding which is
threatened before, on or after the date of this Agreement but which is not
pending prior to the date hereof. This Agreement shall not apply to any action,
suit or proceeding which was brought before the date of this Agreement. So long
as the foregoing is satisfied, this Agreement shall be effective for, and be
applicable to, acts or omissions occurring prior to, on or after the date
hereof.
15. Non-exclusivity. The rights of Director under this Agreement shall
not be deemed exclusive, or in limitation of, any rights to which Director may
be entitled under any applicable common or statutory law, or pursuant to the
Certificate, the By-Laws, vote of stockholders or otherwise.
16. Other Payments. The Company shall not be liable to make any payment
under this Agreement in connection with any action, suit or proceeding against
Director to the extent Director has otherwise received payment of the amounts
otherwise payable by the Company hereunder.
17. Subrogation. In the event the Company makes any payment under this
Agreement, the Company shall be subrogated, to the extent of such payment, to
all rights of recovery of Director with respect thereto, and Director shall
execute all agreements, instruments, certificates or other documents and do or
cause to be done all things necessary or appropriate to secure such recovery
rights to the Company including, without limitation, executing such documents as
shall enable the Company to bring an action or suit to enforce such recovery
rights and assisting the Company in prosecuting the same.
18. Survival; Continuation. The rights of Director under this Agreement
shall inure to the benefit of Director, his heirs, executors, administrators,
personal representatives and assigns, and this Agreement shall be binding upon
the Company, its successors and assigns. The rights of Director under this
Agreement shall continue so long as Director may be subject to any action, suit
or proceeding because of the fact that Director is or was a director, officer,
employee or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
19. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless made in writing
signed by both parties hereto.
6
7
20. Headings. Section headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
21. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by overnight
delivery service, cable, telegram, facsimile transmission or telex to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
(a) if to the Company:
PharMerica, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
with a copy to: C. Xxxxxx Xxxxxxxxx, M.D.
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx Manner
(b) if to the Director:
-------------
Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.
22. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be automatically modified to the extent necessary
to render it legal, valid and enforceable, and if no such modification shall
render it legal, valid and enforceable, then this Agreement shall be construed
as if not containing the provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced accordingly.
23. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or
7
8
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
24. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
25. CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW,
AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
26. Definitions. As used in this Indemnification Agreement, the
following terms shall have the following meanings:
(a) Change in Control. A "Change in Control" shall be deemed
to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, is or becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the outstanding securities of the Company,
or (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the
Company 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 a majority 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 (iii) the
stockholders of the Company approve (x) a merger or consolidation of
the Company with any other entity (other than a merger or consolidation
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 60% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation), (y) a plan of complete
liquidation of the Company or (z) an agreement or agreements for the
sale or disposition, in a single transaction or series of related
transactions, by the Company of all or substantially all of the
property and assets of the Company. Notwithstanding the foregoing,
events otherwise constituting a Change in Control in accordance with
the foregoing shall not constitute a Change in Control if such events
are solicited by the Company and are approved, recommended or supported
by a majority of the Board of Directors of the Company in actions taken
prior to, and with respect to, such events.
(b) Reviewing Party. A "Reviewing Party" means (i) the Board
of Directors or a committee of directors of the Company, who are not
officers, appointed by the Board of Directors, provided that a majority
of such directors are not parties to the claim or (ii)
8
9
special, independent counsel selected and appointed by the Board of
Directors or by a committee of directors of the Company who are not
officers.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
COMPANY:
PHARMERICA, INC.
By:
---------------------------------
Its:
-------------------------------
------------------------------------
, Director
---------------
9
