Exhibit 15
RETENTION AND INDEMNIFICATION AGREEMENT
THIS RETENTION AND INDEMNIFICATION AGREEMENT (this "Agreement") is
entered into effective as of June 26, 2002, by and among (i) NCS Healthcare,
Inc., a Delaware corporation (the "Company"), and (ii) each of the directors
and/or officers of the Company listed on Exhibit A to this Agreement (each an
"Indemnitee" and collectively, the "Indemnitees").
R E C I T A L S :
A. The Company and the Indemnitees are aware of the exposure to
litigation of officers, directors and representatives of the Company as such
persons exercise their duties to the Company;
B. The Company desires to continue to benefit from the services of
highly qualified, experienced and otherwise competent persons such as the
Indemnitees; and
C. Each of the Indemnitees currently desires to continue to serve the
Company as a director or officer or, at the request of the Company, as a
director, trustee, officer, employee, member, manager or agent of another
corporation, limited liability company, partnership, joint venture, trust or
other enterprise, for so long as the Company continues to provide, on an
acceptable basis, adequate and reliable indemnification against certain
liabilities and expenses which may be incurred by each Indemnitee.
NOW, THEREFORE, in consideration of providing stability and an
incentive for continued service on the part of each Indemnitee, and in
consideration of the foregoing premises and the mutual covenants contained in
this Agreement, the parties to this Agreement hereby agree as follows:
1. INDEMNIFICATION. The Company agrees to indemnify each of the
Indemnitees against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by each of them
("Expenses") in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, investigative (a
"Proceeding"), to which any of the Indemnitees was, is or is threatened to be
made a party by reason of facts which include that said Indemnitee is or was a
director, officer, employee or agent of the Company and/or is or was serving at
the request of the Company ("representative") as a director, trustee, officer,
employee, member, manager or agent of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, to the extent of
the highest and most advantageous to the Indemnitee, as determined by the
Indemnitee, of one or any combination of the following:
a. The benefits provided by the Company's current By-Laws (the
"By-Laws") in effect on the effective date of this Agreement (whether
or not the
By-Laws are in effect at the time Expenses are incurred by an
Indemnitee), a copy of the relevant portions of which are attached to
this Agreement as Exhibit B;
b. The benefits allowable under Delaware law in effect at the
date hereof, including, without limitation, the benefits allowable
under Section 145 of the Delaware General Corporation Law;
c. The benefits allowable under the laws of the jurisdiction
under which the Company exists at the time Expenses are incurred by the
Indemnitee;
d. The benefits available under any liability insurance
obtained by the Company; and
e. Such other benefits as are or may be otherwise due or
available to Indemnitee.
Combination of two or more of the benefits provided by (a) through (e)
shall be available to the extent that the Applicable Document (as defined below)
does not require that the benefits provided therein be exclusive of other
benefits. The document or law providing for the benefits listed in items (a)
through (e) above is called the "Applicable Document" in this Agreement. The
Company hereby undertakes to use its best efforts to assist Indemnitee, in all
proper and legal ways, to obtain the benefits selected by Indemnitee under items
(a) through (e) above.
For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans for employees of the Company or of any affiliated
entity without regard to ownership of such plans; references to "fines" shall
include any excise taxes assessed on any of the Indemnitees with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, any of the Indemnitees
with respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; and if the Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
interest of the participants and beneficiaries of an employee benefit plan, he
shall be deemed to have acted in a manner consistent with the standards required
for indemnification by the Company under the Applicable Documents.
2. TERM; INSURANCE; TRUST FUND. The term of this Agreement (the "Term")
shall begin on the date first written above and shall end on the date that
immediately follows the expiration of the last to expire of all applicable
statutes of limitations pursuant to which any Proceeding could be commenced;
provided, however that the Term shall be extended to the extent and for so long
as (i) any such statute of limitations is waived, suspended, tolled or extended
and/or (ii) any Proceeding has, prior to the otherwise applicable expiration of
the Term, been commenced and remains subject to a final and non-appealable
adjudication or other determination, and for sixty (60) days thereafter;
provided, further, that the Term shall be further extended as necessary to
satisfy any
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request for indemnification made by an Indemnitee during the otherwise
applicable Term. The Company shall maintain liability insurance of the same
type(s) and in the same amount(s) as provided on the date of this Agreement,
provided and to the extent that such insurance is available for a similar price
or similar prices (taking into account reasonable cost of living increases). (If
the Company is unable to maintain liability insurance of the same type(s) and in
the same amount(s) as provided on the date of this Agreement for a similar price
or similar prices (taking into account reasonable cost of living increases),
then the Company shall procure liability insurance of such type(s) and in such
amount(s) that the Company can reasonably afford for substantially the same
aggregate cost (taking into account reasonable cost of living increases) as what
the Company currently spends for liability insurance.) However, the Company
agrees that the provisions of this Agreement shall remain in effect regardless
of whether liability or other insurance coverage is at any time obtained or
retained by the Company; except that any payments in fact made to any of the
Indemnitees under an insurance policy obtained or retained by the Company shall
reduce the obligation of the Company to make payments under this Agreement by
the amount of the payments made under any such insurance policy. As of the
effective date of this Agreement, for the purposes of covering the Indemnitees'
services under this Agreement, the Company maintains certain management
liability insurance policies (the "Existing Policies"), subject to various
retention amounts (collectively, the "Retention Amounts") depending on the
nature of the claims brought under the Existing Policies. The Company
acknowledges that its Board of Directors (the "Board") has reviewed and approved
that certain Trust Agreement dated as of even date among certain officers and
directors of the Company and Trustee (the "Trust Agreement"). In order to
expressly ensure that adequate funds are available to satisfy indemnification
claims of the Indemnitees, including, without limitation any Retention Amounts
that are required to be paid by the Company in the event that one or more
appropriate claims are brought against one or more of the Indemnitees,
simultaneous with the execution and delivery of this Agreement and the Trust
Agreement, the Company shall deliver to the custody of the Trustee (as defined
in the Trust Agreement), by wire transfer or by Company check, the sum of Nine
Hundred Seventy-Five Thousand ($975,000), to be used and maintained as provided
in the Trust Agreement. In consideration of each of the Indemnitees providing
continued service to the Company, the Company shall enter into the Trust
Agreement for the purpose of providing the indemnity to the Trustee discussed in
Section 5(c) of the Trust Agreement.
3. PAYMENT OF EXPENSES. At Indemnitee's request, after receipt of
written notice pursuant to Section 5 of this Agreement and an undertaking in the
form of Exhibit C attached to this Agreement by or on behalf of an Indemnitee to
repay such amounts so paid on an Indemnitee's behalf if it shall ultimately be
determined under the Applicable Document that an Indemnitee is not entitled to
be indemnified by the Company for such Expenses, the Company shall pay the
Expenses as and when incurred by an Indemnitee. That portion of Expenses which
represents attorneys' fees and other costs incurred in defending any proceeding
shall be paid by the Company within thirty (30) days of its receipt of such
request, together with reasonable documentation (consistent, in the case of
attorneys' fees, with Company practice in payment of legal fees) evidencing the
amount
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and nature of such Expenses, subject to its also having received such a notice
and undertaking.
4. ADDITIONAL RIGHTS. The indemnification and advancement of expenses
provided in this Agreement (i) shall not be exclusive of any other
indemnification or right to which Indemnitee may be entitled and (ii) shall
continue after an Indemnitee has ceased to occupy a position as an officer,
director, employee, agent or representative as described in Section 1 above with
respect to Proceedings relating to or arising out of an Indemnitee's acts or
omissions during his service in such position.
5. NOTICE TO COMPANY. Each Indemnitee shall provide to the Company
prompt written notice of any Proceeding brought, threatened, asserted or
commenced against an Indemnitee with respect to which an Indemnitee may assert a
right to indemnification under this Agreement; provided that failure to provide
such notice shall not, in any way, limit an Indemnitee's rights, or the
Company's obligations, under this Agreement.
6. COOPERATION IN DEFENSE AND SETTLEMENT. An Indemnitee shall not,
absent a court order, make any statement of fact that relates to any matter in
dispute (other than to an authorized officer, director, employee or agent of the
Company or to Indemnitee's counsel) or effect any settlement without the
Company's written consent unless the Indemnitee shall have determined to
undertake his own defense in such matter and has waived the benefits of this
Agreement. The Company shall not settle any Proceeding to which an Indemnitee is
a party in any manner which would impose any Expense on an Indemnitee without
his written consent. Neither an Indemnitee nor the Company shall unreasonably
withhold, or delay in giving, consent to any proposed settlement. Each of the
Indemnitees and the Company shall cooperate to the extent reasonably possible
with each other and with the Company's insurers, in attempts to defend and/or
settle such Proceeding.
7. ASSUMPTION OF DEFENSE. 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 an Indemnitee's defense in any
Proceeding, with counsel mutually satisfactory to the Indemnitee and the
Company. After notice from the Company to an Indemnitee of the Company's
election so to assume such defense, the Company shall not be liable to the
Indemnitee under this Agreement for Expenses subsequently incurred by Indemnitee
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. An Indemnitee shall have the right
to employ counsel in such Proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the Indemnitee's expense unless:
a. The employment of counsel by an Indemnitee has been
authorized by the Company;
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b. Counsel employed by the Company initially is unacceptable
or later becomes unacceptable to Indemnitee and such unacceptability is
reasonable under then existing circumstances;
c. An Indemnitee shall have reasonably concluded that there
may be a conflict of interest between an Indemnitee and the Company in
the conduct of the defense of such Proceeding; or
d. The Company shall not have employed counsel promptly to
assume the defense of such Proceeding,
in each of which cases the fees and expenses of counsel shall be at the expense
of the Company and subject to payment pursuant to this Agreement. The Company
shall not be entitled to assume the defense of an Indemnitee in any Proceeding
brought by or on behalf of the Company or as to which an Indemnitee shall have
made either of the conclusions provided for in clause (b) or (c) above.
8. ENFORCEMENT. In the event that any dispute or controversy shall
arise under this Agreement between an Indemnitee and the Company with respect to
whether the Indemnitee is entitled to indemnification in connection with any
Proceeding or with respect to the amount of Expenses incurred, then with respect
to each such dispute or controversy, the matter will be submitted for
arbitration to the American Arbitration Association, in Cleveland, Ohio in
accordance with the then prevailing rules of that Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction in Cuyahoga County, Ohio. In any arbitration under this Agreement,
the prevailing party shall be entitled to recover from the other party any and
all costs reasonably incurred by the prevailing party in such arbitration,
including, without limitation, reasonable attorneys' fees; provided that an
Indemnitee shall not be obligated to reimburse the Company unless the
arbitrator(s) resolving the dispute determines that the Indemnitee acted in bad
faith in bringing such action.
9. EXCLUSIONS. Notwithstanding the scope of indemnification which may
be available to an Indemnitee from time to time under any Applicable Document,
no indemnification, reimbursement or payment shall be required of the Company
hereunder with respect to:
a. Any claim or any part thereof as to which an Indemnitee
shall have been adjudged by a court of competent jurisdiction from
which no appeal is or can be taken to have acted not in good faith or
not in a manner he reasonably believed to be in and not opposed to the
best interests of the Company and, with respect to any criminal action
or proceeding, had reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be opposed to or not in the best
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interests of the Company, and, with respect to any criminal action or
proceeding had no reasonable cause to believe that his conduct was
unlawful;
b. Any obligation of an Indemnitee based upon or attributable
to the Indemnitee gaining in fact any personal gain, profit or
advantage to which he was not entitled;
c. Any claim or any part thereof arising under Section 16(b)
of the Securities Exchange Act of 1934, as amended, pursuant to which
an Indemnitee shall be obligated to pay any penalty, fine, settlement
or judgment; or
d. Any Proceeding initiated by an Indemnitee without the
consent or authorization of the Board, provided that this exclusion
shall not apply with respect to any claims brought by Indemnitee to
enforce his rights under this Agreement or the Trust Agreement or to
any claims asserted by the Indemnitee in a Proceeding initiated by
another person or entity even if such claims were brought by the
Indemnitee against a person or entity who was not otherwise a party to
such Proceeding.
Nothing in this Section 9 shall eliminate or diminish the Company's
obligations to advance that portion of an Indemnitee's Expenses which represents
attorneys' fees and other costs incurred in defending any proceeding pursuant to
Section 3 of this Agreement.
10. EXTRAORDINARY TRANSACTIONS. The Company covenants and agrees that
in the event of any merger, consolidation or reorganization in which the Company
is not the surviving entity, any sale of all or substantially all of the assets
of the Company or any liquidation of the Company (each such event is hereinafter
referred to as an "extraordinary transaction"), the Company shall:
a. Cause the obligations of the Company under this Agreement
to be expressly assumed by the survivor, purchaser or successor, as the
case may be, in such extraordinary transaction; or
b. Otherwise adequately provide for the satisfaction of the
Company's obligations under this Agreement.
11. NO PERSONAL LIABILITY. Each of the Indemnitees agrees that neither
the Board nor any officer, employee, representative or agent of the Company
shall be personally liable for the satisfaction of the Company's obligations
under this Agreement, and each of the Indemnitees shall look solely to the
assets of the Company, any insurance proceeds available as referred to in
Section 2 of this Agreement or otherwise, and the funds available pursuant to
the Trust Agreement for satisfaction of any claim hereunder.
12. SEVERABILITY. If any provision, phrase or other portion of this
Agreement should be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable, in whole or in part, and such determination
should become final, such provision, phrase or other portion shall be deemed to
be severed or limited, but only to the
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extent required to render the remaining provisions and portions of this
Agreement enforceable, and the Agreement as thus amended shall be enforced to
give effect to the intention of the parties insofar as that is possible.
13. SUBROGATION. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent thereof to all rights to
indemnification or reimbursement against any insurer or other entity or person
vested in an Indemnitee, who shall execute all instruments and take all other
actions as shall be reasonably necessary for the Company to enforce such rights.
14. GOVERNING LAW. The parties hereto agree that this Agreement shall
be construed and enforced in accordance with and governed by the laws of the
State of Delaware.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be considered to have been duly given if
delivered by hand and receipted for by the party to whom the notice, request,
demand or other communication shall have been directed, or mailed by certified
mail, return receipt requested, with postage prepaid:
(a) If to the Company, to:
NCS HealthCare, Inc.
Suite 220
3201 Enterprise Parkway
Beachwood, OH 44122
Attention: Mary Beth Levine
(b) If to an Indemnitee, to the particular Indemnitee's
address listed on Exhibit A to this Agreement;
or to such other or further address as shall be designated from time to time by
the Indemnitee or the Company to the other.
16. COUNTERPARTS. This Agreement may be executed in several
counterparts (including by facsimile transmission), each of which so executed
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument bearing a uniform date, namely, the date
first written above, and as if all had been executed together on such date.
17. NO EMPLOYMENT AGREEMENT. The adoption and maintenance of this
Agreement shall neither be nor be deemed as an employment contract or
arrangement between the Company and any Indemnitee.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
with respect to the subject matter of this Agreement and supersedes all prior
written and oral agreements with respect to the subject matter of this
Agreement, and the rights and duties
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of the Indemnitees and the Company under this Agreement may not be amended,
modified or terminated except by written instrument signed and delivered by the
parties to this Agreement.
This Agreement is and shall be binding upon and shall inure to the
benefits of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
NSC HEALTHCARE, INC.
By: /s/ Jon H. Outcalt
--------------------------------
INDEMNITEES
/s/ Richard L. Osborne /s/ Bradley L. Pinkerton
- ------------------------------------ -----------------------------------
Richard L. Osborne Bradley L. Pinkerton
/s/ Jon H. Outcalt /s/ Judith Fimiani
- ------------------------------------ -----------------------------------
Jon H. Outcalt Judith Fimiani
/s/ Boake A. Sells /s/ Jeffrey Fix
- ------------------------------------ -----------------------------------
Boake A. Sells Jeffrey Fix
/s/ Kevin B. Shaw /s/ Brad Haney
- ------------------------------------ -----------------------------------
Kevin B. Shaw Brad Haney
/s/ William B. Byrum /s/ Elliot Lekawa
- ------------------------------------ -----------------------------------
William B. Byrum Elliot Lekawa
/s/ Gerald D. Stethem /s/ Jeffrey Rosner
- ------------------------------------ -----------------------------------
Gerald D. Stethem Jeffrey Rosner
/s/ Mary Beth Levine /s/ Natalie R. Wenger
- ------------------------------------ -----------------------------------
Mary Beth Levine Natalie R. Wenger
/s/ John P. DiMaggio /s/ Randall V. Gaj
- ------------------------------------ -----------------------------------
John P. DiMaggio Randall V. Gaj
/s/ Thomas Bryant Mangum /s/ Linda L. Snee
- ------------------------------------ -----------------------------------
Thomas Bryant Mangum Linda L. Snee
/s/ Michael J. Mascali /s/ Thomas D'Andrea
- ------------------------------------ -----------------------------------
Michael J. Mascali Thomas D'Andrea
/s/ Bob Lyle /s/ David Stacy
- ------------------------------------ -----------------------------------
Bob Lyle David Stacy
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