Exhibit 10.39
INDEMNIFICATION AGREEMENT
This agreement is made ____________, at Dublin, Ohio, between Cardinal
Health, Inc., an Ohio corporation (the "Company"), and _________ (the
"Officer").
Background Information
A. The Officer is an officer and employee of the Company and/or one or more of
its subsidiaries and, in that capacity, is performing valuable services for the
Company.
B. The shareholders of the Company have adopted a Restated Code of Regulations,
as amended (the "Regulations"), providing for indemnification of the officers of
the Company in accordance with Section 1701.13 of the Ohio Revised Code (the
"Statute"). The Regulations and the Statute specifically provide that they are
not exclusive, and contemplate that contracts may be entered into between the
Company and officers with respect to indemnification of officers.
C. The Company and Officer recognize the substantial cost of carrying directors
and officers liability insurance ("D&O Insurance") and that the Company may
elect not to carry D&O Insurance from time to time.
D. The Company and Officer further recognize that officers and directors may be
exposed to certain risks not covered by D&O Insurance.
E. These factors with respect to the coverage and cost to the Company of D&O
Insurance and issues concerning the scope of indemnity under the Statute and
Regulations generally have raised questions concerning the adequacy and
reliability of the protection presently afforded to officers.
F. In order to address such issues and induce the Officer to continue to serve
as an officer and employee of the Company or one of its subsidiaries, the
Company has determined to enter into this agreement with the Officer.
Statement of Agreement
In consideration of the Officer's continued service as an officer of
the Company or one of its subsidiaries after the date of this agreement, the
Company and the Officer hereby agree as follows:
Section 1. Indemnity of Officer. Subject only to the limitations set
forth in Section 2, below, the Company shall indemnify the Officer to the full
extent not otherwise prohibited by the Statute or other applicable law,
including without limitation indemnity:
(a) Against any and all costs and expenses (including legal,
expert, and other professional fees and expenses), judgments, damages,
fines (including excise taxes with respect to employee benefit plans),
penalties, and amounts paid
in settlement actually and reasonably incurred by the Officer
(collectively, "Expenses"), in connection with any threatened, pending,
or completed action, suit or proceeding, or arbitration or other
alternative dispute resolution mechanism (whether civil, criminal,
administrative, or investigative and including without limitation an
action by or in the right of the Company) (each a "Proceeding") to
which the Officer is or at any time becomes a party, or is threatened
to be made a party, as a result, directly or indirectly, of serving at
any time: (i) as an officer, employee, or agent of the Company; or (ii)
at the request of the Company as a director, officer, employee,
trustee, fiduciary, manager, member, or agent of a corporation,
partnership, trust, limited liability company, employee benefit plan,
or other enterprise or entity; and
(b) Otherwise to the fullest extent that the Officer may be
indemnified by the Company under the Regulations and the Statute,
including without limitation the non-exclusivity provisions thereof.
Section 2. Limitations on Indemnity. No indemnity pursuant to Section 1
shall be paid by the Company:
(a) Except to the extent that the aggregate amount of losses
to be indemnified exceed the aggregate amount of such losses for which
the Officer is actually paid or reimbursed pursuant to D&O Insurance,
if any, which may be purchased and maintained by the Company or any of
its subsidiaries;
(b) On account of any Proceeding in which judgment is rendered
against the Officer for an accounting of profits made from the purchase
or sale of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended;
(c) On account of the Officer's conduct which is determined
(pursuant to the Statute) to have been knowingly fraudulent,
deliberately dishonest, or willful misconduct, except to the extent
such indemnity is otherwise permitted under the Statute;
(d) With respect to any remuneration paid to the Officer
determined, by a court having jurisdiction in the matter in a final
adjudication from which there is no further right of appeal, to have
been in violation of law;
(e) If it shall have been determined by a court having
jurisdiction in the matter, in a final adjudication from which there is
no further right of appeal, that indemnification is not lawful;
(f) On account of the Officer's conduct to the extent it
relates to any matter that occurred prior to the time such individual
became an officer of the Company; provided, however, that this
limitation shall not apply to the extent such matter occurred while the
Officer was an officer, employee or agent of the Company or its
subsidiaries (other than prior to the time such entity became a
subsidiary of the Company); or
-2-
(g) With respect to Proceedings initiated or brought
voluntarily by the Officer and not by way of defense, except pursuant
to Section 8 with respect to proceedings brought to enforce rights or
to collect money due under this agreement; provided however that
indemnity may be provided by the Company in specific cases if the Board
finds it to be appropriate.
In no event shall the Company be obligated to indemnify the Officer
pursuant to this agreement to the extent such indemnification is prohibited by
applicable law.
Section 3. Advancement of Expenses. Subject to Section 7 of this
agreement, the Expenses incurred by the Officer in connection with any
Proceeding shall be promptly reimbursed or paid by the Company as they become
due; provided the Officer submits a written request to the Company for such
payment together with reasonable supporting documentation for such Expenses; and
provided further that the Officer, at the request of the Company, submits to the
Company an undertaking to the effect stated in Section 7, below.
Section 4. Insurance and Self Insurance. The Company shall not be
required to maintain D&O Insurance in effect if and to the extent that such
insurance is not reasonably available or if, in the reasonable business judgment
of the Board, either (a) the premium cost of such insurance is disproportionate
to the amount of coverage, or (b) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance. To
the extent the Company determines not to maintain D&O Insurance, the Company
shall be deemed to be self-insured within the meaning of Section 1701.13(E)(7)
of the Statute and shall, in addition to the Officer's other rights hereunder,
provide protection to the Officer similar to that which otherwise would have
been available to the Officer under such insurance.
Section 5. Continuation of Obligations. All obligations of the Company
under this agreement shall apply retroactively beginning on the date the Officer
commenced as, and shall continue during the period that the Officer remains, an
officer, employee, or agent of the Company or is, as described above, a
director, officer, employee, trustee, fiduciary, manager, member, or agent of
another corporation, partnership, limited liability company, trust, employee
benefit plan, or other enterprise and shall continue thereafter as long as the
Officer may be subject to any possible claim or any threatened, pending or
completed Proceeding as a result, directly or indirectly, of being such a
director, officer, employee, trustee, fiduciary, manager, member, or agent.
Section 6. Notification and Defense of Claim. Promptly after receipt by
the Officer of notice of the commencement of any Proceeding, if a claim is to be
made against the Company under this agreement, the Officer shall notify the
Company of the commencement thereof, but the delay or omission to so notify the
Company shall not relieve the Company from any liability which it may have to
the Officer under this agreement, except to the extent the Company is materially
prejudiced by such delay or omission. With respect to any such Proceeding of
which the Officer notifies the Company of the commencement:
-3-
(a) The Company shall be entitled to participate therein at
its own expense;
(b) The Company shall be entitled to assume the defense
thereof, jointly with any other indemnifying party similarly notified,
with counsel selected by the Company and approved by the Officer, which
approval shall not unreasonably be withheld. After notice from the
Company to the Officer of the Company's election to assume such
defense, the Company shall not be liable to the Officer under this
agreement for any legal or other Expenses subsequently incurred by the
Officer in connection with the defense thereof except as otherwise
provided below. The Officer shall have the right to employ his own
counsel in such Proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of such
defense shall be the expenses of the Officer unless (i) the employment
of such counsel by the Officer has been authorized by the Company, (ii)
the Officer, upon the advice of counsel, shall have reasonably
concluded that there may be a conflict of interest between the Company
and the Officer in the conduct of such defense, or (iii) the Company
has not in fact employed counsel to assume such defense, in any of
which cases the fees and expenses of such counsel shall be the expense
of the Company. The Company shall not be entitled to assume the defense
of any Proceeding brought by or on behalf of the Company or as to which
the Officer, upon the advice of counsel, shall have made the conclusion
described in (ii), above. In the event the Company assumes the defense
of any Proceeding as provided in this Section 6(b), the Company may
defend or settle such Proceeding as it deems appropriate; provided,
however, the Company shall not settle any Proceeding in any manner
which would impose any penalty or limitation on the Officer without the
Officer's written consent, which consent shall not be unreasonably
withheld.
(c) The Company shall not be required to indemnify the Officer
under this agreement for any amounts paid in settlement of any
Proceeding without the Company's written consent, which consent shall
not be unreasonably withheld.
(d) The Officer shall cooperate with the Company in all ways
reasonably requested by it in connection with the Company fulfilling
its obligations under this agreement.
Section 7. Repayment of Expenses. The Officer shall reimburse the
Company for all Expenses paid by the Company pursuant to Section 3 of this
agreement or otherwise in defending any Proceeding against the Officer if and
only to the extent that a determination shall have been made by a court in a
final adjudication from which there is no further right of appeal that the
Officer is not entitled to indemnification by the Company for such Expenses
under the Statute, the Regulations, this agreement, or otherwise.
Section 8. Enforcement. The Company expressly confirms that it has
entered into this agreement and has assumed the obligations of this agreement in
order to induce the Officer to continue as an officer and employee of the
Company and acknowledges that the Officer is relying upon this agreement in
continuing in that capacity. If the Officer is
-4-
required to bring an action to enforce rights or to collect money due under this
agreement, the Company shall reimburse the Officer for all of the Officer's
reasonable fees and expenses (including legal, expert, and other professional
fees and expenses) in bringing and pursuing such action, unless the court
determines that each of the material assertions made by the Officer as a basis
for such action were not made in good faith or were frivolous. The Company shall
have the burden of proving that indemnification is not required under this
agreement, unless a prior determination has been made by the shareholders of the
Company or a court of competent jurisdiction that indemnification is not
required hereunder.
Section 9. Rights Not Exclusive. The indemnification provided by this
agreement shall not be deemed exclusive of any other rights to which the Officer
may be entitled under the Company's articles of incorporation, Regulations, any
vote of the shareholders or disinterested directors of the Company, the Statute,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 10. Separability. Each of the provisions of this agreement is a
separate and distinct agreement and independent of the others so that, if any
provisions of this agreement shall be held to be invalid and unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this agreement.
Section 11. Modification to Applicable Law. In the event there is a
change, after the date of this agreement, in any applicable law (including
without limitation the Statute) which: (a) expands the right of an Ohio
corporation to indemnify a member of its board of directors or an officer, such
change shall be automatically included within the scope of the Officer's rights
and Company's obligations under this agreement; or (b) narrows the right of an
Ohio corporation to indemnify a member of its board of directors or an officer,
such change, to the extent not otherwise required by such law, shall have no
effect on this agreement or the parties' rights and obligations hereunder.
Section 12. Partial Indemnity. If the Officer is entitled under any
provision of this agreement to indemnity by the Company for some or a portion of
the Expenses actually or reasonably incurred by him in the investigation,
defense, appeal, or settlement of any Proceeding, but not for the total amount
thereof, the Company shall nevertheless indemnify the Officer for the portion of
such Expenses to which the Officer is entitled.
Section 13. Governing Law. This agreement shall be interpreted and
enforced in accordance with the laws of the State of Ohio, without regard to
choice of law principles.
Section 14. Successors. This agreement shall be binding upon, inure to
the benefit of, and be enforceable by and against the Officer and the Company
and their respective heirs, successors, and assigns. The Company shall require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely, and unconditionally to assume and
agree to perform this agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place.
-5-
Section 15. Prior Agreements. This agreement shall supersede any other
agreements entered into prior to the date of this agreement between the Company
and the Officer concerning the subject matter of this agreement.
Section 16. Consent to Jurisdiction. The Company and the Officer each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Ohio for all purposes in connection with any action or proceeding which arises
out of or relates to this agreement and hereby waives any objections or defenses
relating to jurisdiction with respect to any lawsuit or other legal proceeding
initiated in or transferred to such courts.
CARDINAL HEALTH, INC.
By
---------------------------
OFFICER:
------------------------------
-6-
