Exhibit 10.1
EXECUTIVE SEVERANCE AND INDEMNIFICATION AGREEMENT
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This Executive Severance Agreement (the "Agreement") is entered into
effective as of June 25, 1997 between Procept, Inc. (the "Company"), a Delaware
corporation with its principal executive offices at 000 Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and Xxxxxxx X. Xxxx (the "Executive") residing
at 000 Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined in
subsection 3(a) hereof) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control, to
encourage the Executive's full attention and dedication to the Company currently
and in the event of any threatened or pending Change of Control, and to provide
the Executive with compensation arrangements upon a Change of Control which
provide the Executive with individual financial security and which are
competitive with those of other corporations and, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.
Accordingly, the parties agree as follows:
X. XXXXXXXXX
1. Severance Benefits. In order to induce the Executive to remain in
the employ of the Company and in consideration of the Executive's agreement set
forth in subsection 3(c) of this Section A, the Company agrees that the
Executive shall receive the severance benefits set forth in this Agreement in
the event his employment with the Company is terminated subsequent to a Change
in Control under the circumstances described below.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1999; provided, however, that
commencing on December 31, 1999 and each December 31 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 30 of such year, the Company shall have given notice
that it does not wish to extend this Agreement (provided that no such notice may
be given during the pendency of a Potential Change in Control, as defined in
subsection 3(b) of this Section A). If a Change in Control shall have occurred
during the original or extended term of this Agreement, this Agreement shall
continue in effect for a period of thirty-six (36) months beyond the month in
which the Change in Control occurred. Notwithstanding anything provided herein
to the contrary, the term of this Agreement shall not extend beyond the end of
the month in which the Executive
attains "normal retirement age" under the provisions of the Company's benefit
plans (the "Benefit Plans") or, if the Benefit Plans do not so provide, the
Executive reaches age sixty-five (65).
3. Change in Control; Potential Change in Control.
a. No benefits shall be payable hereunder unless there shall
have been a Change in Control, as set forth below. For purposes of this
Agreement, a "Change in Control" shall mean a change in control of the Company
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is in fact
required to comply therewith; provided, that, without limitation, 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 Exchange Act), other than the Company, any
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 the Exchange Act),
directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities;
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period constitute
the Board and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a
transaction described in paragraphs (i), (iii) or (iv) of this
subsection 3(a)) whose election by the Board or nomination for election
by the Board or by the stockholders of the Company was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of such 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 a
merger or consolidation of the Company with any other corporation,
other than (1) 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 50%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(2) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
hereinabove defined) acquires 30% or more of the combined voting power
of the Company's then outstanding securities; or
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(iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
b. For purposes of this Agreement, a "Potential Change in
Control" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(ii) any person (as hereinabove defined), including
the Company, publicly announces an intention to take or consider taking
actions which if consummated would constitute a Change in Control;
(iii) any person (as hereinabove defined), other than
the Company, any 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 (1) is or
becomes the beneficial owner, (2) discloses directly or indirectly to
the Company or publicly a plan or intention to become the beneficial
owner, or (3) makes a filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, with respect to securities to
become the beneficial owner, directly or indirectly, of securities
representing 30% or more of the combined voting power of the
outstanding voting securities of the Company; or
(iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control of
the Company has occurred.
c. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control, he
will remain in the employ of the Company until the earliest of (1) a date which
is one (1) year from the occurrence of such Potential Change in Control, (2) the
termination by the Executive of his employment after he attains "normal
retirement age" or by reason of death or Disability as defined in subsection
4(a), (3) the date of the occurrence of a Change in Control or (4) the
determination in good faith by the Board that the event creating such Potential
Change of Control has ceased to exist.
4. Termination Following Change in Control. If any of the events
constituting a Change in Control shall have occurred during the term of this
Agreement, the Executive shall be entitled to the benefits provided in
subsection 5(c) of this Section A upon the subsequent termination of his
employment unless such termination is (a) because of the Executive's death or
Disability, (b) by the Company for Cause or (c) by the Executive other than for
Good Reason. In the event the Executive's employment with the Company is
terminated for any reason and subsequently a Change in Control shall occur, the
Executive shall not be entitled to any benefits hereunder.
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a. Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, he shall have been absent from the full-time
performance of his duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is given he shall
not have returned to the full-time performance of his duties, the Executive's
employment may be terminated for "Disability".
b. Cause. Termination by the Company of the Executive's
employment for "Cause" shall mean termination upon (1) the willful and continued
failure by him to substantially perform his duties with the Company (other than
any such failure resulting from his incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a Notice of
Termination by him for Good Reason, as defined in subsections 4(c) and 4(d),
respectively, of this Section A) after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that he has not
substantially performed his duties, or (2) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this subsection, no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
him, together with his counsel, to be heard before the Board), finding that in
the good faith opinion of the Board the Executive was guilty of conduct set
forth above in this subsection and specifying the particulars thereof in detail.
c. Good Reason. The Executive shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (1) during the nine (9) month period following a Change in Control, a
good faith determination by the Executive that as a result of such Change in
Control, he is not able to discharge his duties effectively or (2) without the
Executive's express written consent, the occurrence after a Change in Control of
any of the following circumstances:
(i) the assignment to the Executive of any duties
inconsistent (except in the nature of a promotion) with the position in
the Company that he held immediately prior to the Change in Control or
a substantial adverse alteration in the nature or status of his
position or responsibilities or the conditions of his employment from
those in effect immediately prior to the Change in Control;
(ii) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the same may
be increased from time to time;
(iii) the Company's requiring the Executive to be
based more than twenty-five (25) miles from the Company's offices at
which he was principally employed immediately prior to the date of the
Change in Control except for required
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travel on the Company's business to an extent substantially consistent
with his present business travel obligations;
(iv) the failure by the Company to pay to the
Executive any portion of his current compensation or compensation under
any deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;
(v) the failure by the Company to continue in effect
any material compensation or benefit plan in which the Executive
participates immediately prior to the Change in Control unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of his participation relative to other participants, than existed
at the time of the Change in Control;
(vi) the failure by the Company to continue to
provide the Executive with benefits substantially similar to those
enjoyed by him under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which he was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by him at the time of the Change in Control, or
the failure by the Company to provide the Executive with the number of
paid vacation days to which he is entitled on the basis of his years of
service with the Company in accordance with the Company's normal
vacation policy in effect at the time of the Change in Control;
(vii) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof; or
(viii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (d) below (and, if
applicable, the requirements of subsection (b) above), which purported
termination shall not be effective for purposes of this Agreement.
The Executive's right to terminate his employment pursuant to this
subsection shall not be affected by his incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
d. Notice of Termination. Any purported termination of the
Executive's employment by the Company or by the Executive shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section C.2 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in
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reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
e. Date of Termination, Etc. "Date of Termination" shall mean
(1) if the Executive's employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of his duties during such thirty (30) day
period), and (2) if the Executive's employment is terminated pursuant to
subsection (b) or (c) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to subsection (b) above shall not be less than thirty (30) days, and in
the case of a termination pursuant to subsection (c) above shall not be less
than fifteen (15) nor more than sixty (60) days from the date such Notice of
Termination is given); provided that if within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this proviso), the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties or by a
binding arbitration award; and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. During the pendency of any such dispute, (1) the
Executive shall not be required to report for work or otherwise continue to
perform his duties with the Company and (2) the Company will continue to pay to
the Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and continue the
Executive and his dependents as participants in all compensation, benefit and
insurance plans in which he or they were participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with this subsection. Amounts paid under this subsection are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
5. Compensation Upon Termination or During Disability Following a
Change of Control. Following a Change in Control, upon either termination of the
Executive's employment or during a period of disability, he shall be entitled to
the following benefits:
a. During any period that the Executive fails to perform his
full-time duties with the Company as a result of incapacity due to physical or
mental illness, he shall continue to receive his base salary at the rate in
effect at the commencement of any such period, together with all compensation
payable to him under the Company's disability plan or program or other similar
plan during such period, until this Agreement is terminated pursuant to
subsection 4(a) of this Section A. Thereafter, or in the event the Executive's
employment shall be terminated by reason of his death, the Executive's benefits
shall be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.
b. If the Executive's employment shall be terminated by the
Company for Cause or by the Executive other than for Good Reason, the Company
shall pay him his full base salary through the Date of Termination at the rate
in effect at the time Notice of
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Termination is given, plus all other amounts to which he is entitled under any
compensation or benefit plan of the Company at the time such payments are due
and the Company shall have no further obligations to the Executive under this
Agreement.
c. If the Executive's employment by the Company shall be
terminated (1) by the Company other than for Cause or Disability or (2) by the
Executive for Good Reason, then he shall be entitled to the benefits provided
below:
(i) the Company shall pay the Executive his full base
salary through the Date of Termination at the rate in effect at the
time the Notice of Termination is given, plus all other amounts to
which he is entitled under any compensation or benefit plan of the
Company, at the time such payments are due, except as otherwise
provided below;
(ii) the Company shall make severance payments to the
Executive equal to the greater of (1) his annual rate of base salary in
effect on the Date of Termination or (2) his annual rate of base salary
in effect immediately prior to the Change in Control (together with the
payments provided in paragraphs (iv) and (vi) below, the "Severance
Payments"), which amount shall be payable during the twelve (12) month
period following the Date of Termination and in substantially equal
installments in accordance with Company practice, as in effect from
time to time, for the payment of salaries. Amounts payable pursuant to
this subsection 5(c)(ii) shall be reduced to the extent the Executive
actually receives, during such time period, salary, consulting or other
similar payments from an organization other than the Company in excess
of the amounts of such payments received prior to the Date of
Termination, and any such payments actually received by him shall be
reported to the Company;
(iii) the Company shall also pay to the Executive,
within five (5) days after any such fees or expenses are incurred, all
legal fees and expenses incurred by him as a result of or in connection
with such termination, including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this Agreement
(other than any such fees or expenses incurred in connection with any
such claim which is determined by arbitration to be frivolous);
(iv) for a twelve (12) month period after such Date
of Termination, the Company shall arrange to provide, at its cost, the
Executive and his dependents with life, disability, accident and health
insurance benefits substantially similar to those which he and they are
receiving immediately prior to the Notice of Termination. Benefits
otherwise receivable by the Executive pursuant to this subsection
5(c)(iv) shall be reduced to the extent comparable benefits are
actually received by him from a subsequent employer during the twelve
(12) month period following his termination, and any such benefits
actually received by him shall be reported to the Company;
(v) the retirement benefits to which the Executive is
entitled under any Company benefit plans, any supplemental retirement
or excess benefit plan
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maintained by the Company or any of its subsidiaries or any successor
plans thereto; and
(vi) should the Executive move his residence in order
to pursue other business opportunities within one (1) year of the Date
of Termination, the Company shall pay him, within five (5) days after
any such expenses are incurred, an amount equal to the expenses
incurred by him in connection with such relocation (including expenses
incurred in selling his home to the extent such expenses were
customarily reimbursed by the Company to transferred executives prior
to the Change in Control) and which are not reimbursed by another
employer.
d. Except as otherwise specifically provided, the payments
provided for in this Section A shall be made not later than the fifth day
following the Date of Termination; provided, however, that if the amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the
"Code") as soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive payable on the fifth day after demand therefor by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
B. INDEMNIFICATION
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings hereafter assigned to them:
a. "Claim" shall mean any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether conducted
by the Company or any other party, that the Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or other.
b. "Expenses" shall include attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in, any Claim
relating to any Indemnifiable Event.
c. "Indemnifiable Event" shall mean any event or occurrence
related to the fact that the Executive is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by the Executive in any
such capacity.
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d. "Indemnitee" shall mean Executive and any partnership,
corporation, trust or other entity of which Executive is or was a partner, a
partner of the general partner of, shareholder, trustee, director, officer,
member, employee or agent and any other entity or person that may be subject to
a Claim by reason of (or arising in part out of) an Indemnifiable Event, and the
references to Indemnitee in this Indemnification Agreement shall be understood
to refer severally to each Indemnitee.
e. "Reviewing Party" shall mean the person or body appointed
by the Company's Board of Directors pursuant to subsection 2(b) of this Section
B, which shall not be or include a person who is a party to the particular Claim
for which the Indemnitee is seeking indemnification.
2. Basic Indemnification Arrangement
a. In the event that the Indemnitee was or is a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in part out
of) an Indemnifiable Event, the Company shall indemnify the Indemnitee to the
fullest extent permitted by law as soon as practicable but in any event no later
than thirty days after written demand is presented to the Company, against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in respect of such
Expenses, judgments, fines, penalties or amounts paid in settlement) of such
Claim. If so requested by the Indemnitee, the Company shall advance (within two
business days of such request) all Expenses to the Indemnitee (an "Expense
Advance"). Notwithstanding anything in this Agreement to the contrary, prior to
a Change in Control, the Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by the
Indemnitee against the Company or any director or officer of the Company
(otherwise than to enforce his rights under this Agreement) unless the Company
has consented to the initiation of such Claim.
b. In the event of any demand by the Indemnitee for
indemnification hereunder or under the Company's Amended and Restated
Certificate of Incorporation or By-laws, the Board of Directors of the Company
shall designate a Reviewing Party, who shall, if there has been a Change of
Control of the Company, be the special independent counsel referred to in
Section 3 hereof. The obligations of the Company under subsection 2(a) of this
Section B shall be subject to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case in which the special
independent counsel referred to in subsection 3 of this Section B hereof is
involved) that the Indemnitee is not permitted to be indemnified under
applicable law, and the obligation of the Company to make an Expense Advance
pursuant to subsection 2(a) shall be subject to the condition that, if, when and
to the extent that the Reviewing Party determines that the Indemnitee is not
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by the Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid. If the Indemnitee has commenced
legal proceedings in a court of competent jurisdiction to secure a determination
that the Indemnitee may be indemnified under applicable law, any determination
made by the Reviewing Party that the Indemnitee is not permitted to be
indemnified under applicable law shall not be binding, and the Indemnitee
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shall not be required to reimburse the Company for any Expense Advance until a
final judicial determination is made with respect hereto (as to which all rights
of appeal therefrom have been exhausted or lapsed). If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
the Indemnitee is not permitted to be indemnified in whole or in part under
applicable law, the Indemnitee shall have the right to commence litigation in
any court in the State of Delaware having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and the Indemnitee.
3. Change in Control. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under the Company's
Amended and Restated Certificate of Incorporation or By-laws now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall seek legal
advice only from special independent counsel selected by the Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld) who
has not otherwise performed services for the Company within the last ten years
(other than in connection with such matters) or for the Indemnitee. Such counsel
among other things, shall render its written opinion to the Company and the
Indemnitee as to whether and to what extent the Indemnitee is permitted to be
indemnified under applicable law. The Company agrees to pay the reasonable fees
of the special independent counsel and to indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and damages
relating to this Agreement or its engagement pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change in
Control, the Company may create a Trust for the benefit of the Indemnitee
(either alone or together with one or more other indemnitees) and from time to
time fund such Trust in such amounts as the Company's Board of Directors may
determine to satisfy Expenses reasonably anticipated to be incurred in
connection with investigating, preparing for and defending any Claim relating to
an Indemnifiable Event, and all judgments, fines, penalties and settlement
amounts of all Claims relating to an Indemnifiable Event from time to time paid
or claimed, reasonably anticipated or proposed to be paid. The terms of any
Trust established pursuant hereto shall provide that upon a Change in Control
(a) the Trust shall not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee, (b) the Trustee shall advance, within two
business days of a request by the Indemnitee, all Expenses to the Indemnitee
(and the Indemnitee hereby agrees to reimburse the Trust under the circumstances
under which the Indemnitee would be required to reimburse the Company under
subsection 2(b) of this Agreement), (c) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (d) all unexpended
funds in such Trust shall revert to the Company upon a final determination by
the Reviewing Party or a court of competent jurisdiction, as the case may be,
that the Indemnitee has been fully indemnified under the terms of this
Agreement. The Trustee shall be a person or entity satisfactory to the
Indemnitee. Nothing in this Section 4 shall relieve the Company of any of its
obligations under this Agreement.
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5. Indemnification for Additional Expenses. The Company shall indemnify
the Indemnitee against all expenses (including attorneys' fees) and, if
requested by the Indemnitee, shall (within two business days of such request)
advance such expenses to the Indemnitee, which are incurred by the Indemnitee in
connection with any claim asserted against or action brought by the Indemnitee
for (i) indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or Company By-law or provision of the Company's
Amended and Restated Certificate of Incorporation now or hereafter in effect
relating to Claims for Indemnifiable Events or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the Company,
regardless of whether the Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance recovery, as the case
may be.
6. Partial Indemnity, Etc. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not for the total amount thereof, the Company shall indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of Claims
relating to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Expenses incurred in connection therewith. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that the Indemnitee is not so entitled.
7. 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 the
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.
8. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under the Company's
Amended and Restated Certificate of Incorporation and By-laws or the Delaware
General Corporation Law or otherwise. To the extent that a change in the
Delaware General Corporation Law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Company's Amended and Restated Certificate of Incorporation and
By-laws and this Agreement, it is the intent of the parties hereto that the
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change.
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Executive shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent to the coverage
available for any Company director or officer.
10. Subrogation. In the event of payment under this Section B, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the
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Indemnitee, who shall execute all such papers and do all such things as may be
necessary or desirable to secure such rights.
11. No Duplication of Payments. The Company shall not be liable under
this Section B to make any payment in connection with any claim made against the
Indemnitee to the extent the Indemnitee has otherwise received payment (under
any insurance policy, the Company's Amended and Restated Certificate of
Incorporation, or the Company's By-laws or otherwise) of the amounts otherwise
indemnifiable hereunder.
C. GENERAL
1. Successors; Binding Agreement.
a. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly 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 had taken
place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company or its successor in
the same amount and on the same terms as he would be entitled to hereunder if he
terminates his employment for Good Reason following a Change in Control, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
b. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If the
Executive should die while any amount would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to his estate.
2. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
3. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No
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waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Massachusetts, without giving effect to the conflicts of law
principles thereof. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of the Company under
subsection 5 of Section A and Section B shall survive the expiration of the term
of this Agreement.
4. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
5. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
6. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three arbitrators in the Commonwealth of
Massachusetts in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
7. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and during
the term of the Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto with respect to the subject matter hereof.
8. Effective Date. This Agreement shall become effective as of the date
set forth above.
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IN WITNESS WHEREOF, the Company, pursuant to due authorization by its
Board of Executives, and the Executive have caused this Agreement to be duly
executed under seal as of the date first written above.
PROCEPT, INC.
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President, Finance and
Chief Financial Officer
Attest:
--------------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx
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