EXHIBIT 10.2
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement is made as of April 16, 1997 between DVL, Inc.,
a Delaware corporation (the "Company") and ▇▇▇▇ ▇▇▇▇▇▇▇ (the "Employee").
RECITALS
The Company desires to employ the Employee as an executive officer, and
the Employee desires to accept such employment, upon the terms and conditions
hereinafter set forth.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. EMPLOYMENT. Effective as of April 16, 1997, the Company hereby
employs the Employee as the Chief Financial Officer and Vice President of the
Company, and the Employee accepts such employment and agrees to devote his
full business time and efforts to the performance of his duties hereunder.
During the term of employment under this Agreement (the "Employment Term"),
the Employee shall perform such duties as shall reasonably be required of him
by the President of the Company. Employee agrees to commence work as an
officer of the Company on April 16, 1997. Employee represents and warrants
to the Company as follows: (1) Employee's execution and delivery of this
Agreement and his performance of his duties and obligations hereunder will not
conflict with, or cause a default under, or give any person or entity a right
to damages under, or to terminate, any other agreement to which Employee is
a party or which he is bound, (2) there are no agreements or understandings
that would make unlawful Employee's execution or delivery of this Agreement
or his employment hereunder and (3) this Agreement contains the entire
agreement of Employee and the Company with respect to the employment by the
Company of Employee and no other promises, representations or agreements exist
between Employee and the Company.
2. EMPLOYMENT TERM. Unless terminated in accordance with Sections 4 or
5, the Employment Term shall consist of a term of twelve (12) calendar months
time period beginning on April 16, 1997 and ending April 15, 1998 (the
"Employment Year").
3. COMPENSATION.
(a) The basic annual compensation of the Employee for his employment
services hereunder shall be $120,000.00 per annum, which shall be payable in
bi-monthly payments (less applicable federal, state and local withholding
taxes with respect thereto) at the same time and method as the other employees
of the Company are paid.
(b) Employee shall also be eligible to receive an annual bonus from the
Company at the end of the 1997 calendar year (which may be payable in cash,
additional stock options, or a combination of cash and stock options) as
determined in the sole and absolute discretion of the President of the
Company.
(c) As soon as possible after April 16, 1997, the Company shall grant
to Employee an option to purchase 50,000 shares of common stock of the Company
(the "Option Shares") pursuant to, and under the existing 1996 Stock Option
Plan of the Company, dated as of September 17, 1996. The exercise price for
such Option shares shall be the market price of the common stock of the
Company as of the date of such grant. It is agreed that the Option Shares
shall vest for all purposes as of the date of grant.
(d) Employee shall be entitled to receive reimbursement throughout the
Employment Term for normal and customary business expenses; provided that such
expenses are approved in advance by the President of the Company.
(e) Employee shall receive a car allowance in the amount of $500.00 per
calendar month, which amount shall be paid, in advance, on a monthly basis to
Employee.
(f) The Company will provide Employee with health insurance benefits
and life insurance coverage and other benefits in accordance with current
Company policy as described in the Schedule A, attached hereto and made a part
hereof.
4. TERMINATION FOR CAUSE - WITHOUT SEVERANCE COMPENSATION. The Employment
Term may be terminated for "Cause" by the Company without written notice only
upon the occurrence of any of the following: (i) the inability of the
Employee to perform his duties hereunder by reason of any mental or physical
disability for a period of more than three consecutive months; (ii) the death
of the Employee; or (iii) the gross negligence of the Employee, or (iv) the
indictment of the Employee for fraud, misappropriation, embezzlement or any
felony; or (v) the wilful refusal of the Employee to perform or execute any
reasonable directive of the President of the Company or the board of directors
of the Company. No severance payments shall be payable to Employee in the
event the Employment Term or this Agreement is terminated by the Company for
Cause.
5. TERMINATION WITHOUT CAUSE - WITH SEVERANCE COMPENSATION. The Company
shall have the right at any time to terminate the Employment Term without
Cause (as set forth in Paragraph 4), for any reason or for no reason. If the
Employee is terminated without Cause, the Employee shall be entitled to
receive severance from the Company for a one month period following the
effective date of such termination, which severance (1) shall be equal to one
payment of 1/12th of the then current base salary of Employee (less applicable
federal, state and local withholding with respect thereto) and (2) shall be
payable at the same time and by the same method as the base salary of Employee
would have been paid to Employee if Employee were employed by the Company for
such one-month period. During the one-month severance period, the car
allowance and the other benefits of the Company would not be payable to
Employee. If the Employment Agreement is not renewed or is not extended or
is not renewed at the same salary level, in each case, for any reason other
than for Cause, then the foregoing severance payments shall be payable by the
Company to Employee. Except for a resignation by Employee following a
reduction of Employee's salary level, no severance payments shall be payable
to Employee in the event Employee voluntarily resigns from the Company for any
reason or for no reason. No payments shall be made to Employee for unused
vacation days under any circumstances.
6. INDEMNIFICATION. The Company shall indemnify Employee pursuant to
the Indemnity Agreement attached hereto as EXHIBIT A.
2
7. CONFIDENTIALITY.
(a) During the Employment Term and for an additional period of five
years thereafter, Employee shall not use for his personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company other than the Company or its
subsidiaries, any Confidential Information. "CONFIDENTIAL INFORMATION" means
information relating to the services or operations of the Company or any
subsidiary thereof that is not generally known, is proprietary to the Company
or such subsidiary and is made known to Employee or learned or acquired by
Employee while in the employ of the Company, including, without limitation,
(i) information relating to research, development, purchasing, accounting,
marketing, merchandising, advertising, selling, leasing, finance and business
methods and techniques, (ii) customer lists and other information relating to
past, present or prospective customers and (iii) the terms and conditions of
any lease, mortgage or other property document related to any property owned,
leased or operated by the Company or by any partnership controlled by the
Company. However, Confidential Information shall not include under any
circumstances any information with respect to the foregoing matters that
becomes publicly available through no fault of Employee or is available to
Employee from other sources who have not secured such information on a
confidential basis from the Company or any affiliate thereof. All materials
or articles of information of any kind furnished to Employee by the Company,
by any partnership controlled by the Company or any of its subsidiaries or
developed by Employee in the course of his employment hereunder are and shall
remain the sole property of the Company, such partnership or such subsidiary,
as applicable; and if the Company, such partnership or such subsidiary, as
applicable, requests the return of such information at any time during, upon
or after the termination of Employee's employment, Employee shall immediately
deliver the same to the Company, such partnership or such subsidiary, as
applicable.
(b) Employee acknowledges that, in view of the nature of the business
in which the Company and its subsidiaries are engaged, the restrictions
contained in Section 7(a) above (the "RESTRICTIONS") are reasonable and
necessary in order to protect the legitimate interests of the Company and its
subsidiaries, and that any violation thereof would result in irreparable
injuries to the Company and its subsidiaries, and Employee therefore further
acknowledges that, in the event Employee violates, or threatens to violate,
any of such Restrictions, the Company and its subsidiaries shall be entitled
to obtain from any court of competent jurisdiction, without the posting of any
bond or other security, preliminary and permanent injunctive relief as well
as damages and an equitable accounting of all earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies in law or equity to which the Company
or its subsidiaries may be entitled. In addition, Employee acknowledges that
a wilful violation of the Restrictions by Employee shall also constitute
"Cause" for the purpose of this Agreement.
(c) If any Restriction, or any part thereof, shall be determined in
any judicial or administrative proceeding to be invalid or unenforceable, the
remainder of the Restrictions shall not thereby be affected and shall be given
full effect, without regard to the invalid provisions. If the period of time
or the area specified in the Restrictions shall be determined in any judicial
or administrative proceeding to be unreasonable, then the court or
administrative body shall have the power to reduce the period of time or the
area covered and, in its reduced form, such provisions shall then be
enforceable and shall be enforced.
3
8. GENERAL.
(a) GOVERNING LAW. The terms of this Agreement shall be governed by
the laws of the State of New Jersey.
(b) ASSIGNABILITY. The Employee may not assign his interest in or
delegate his duties under this Agreement.
(c) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company, its successors and assigns and Employee.
(d) NOTICES. Any notices required hereunder shall be in writing and
shall be deemed to have been given when personally delivered or when mailed,
certified or registered mail, postage prepaid, to the following addresses (or
to such other address as one party may designate by written notice to the
other):
If to the Employee: ▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company: DVL, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Or to the office of the President
(e) ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and may not be modified or amended in any way except in writing by the
parties hereto.
(f) DURATION. Notwithstanding the termination of the Employment Term
and of the Employee's employment by the Company, this Agreement shall continue
to bind the parties for so long as any obligations remain under this
Agreement.
(g) WAIVER. No waiver by the Company of any breach by the Employee
of this Agreement shall be construed to be a waiver as to succeeding breaches.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto duly executed this Agreement as of the date first written above.
DVL, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
/s/▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇▇▇▇▇▇▇
4
SCHEDULE A
1. Health Insurance Benefits for Employee: Oxford Freedom Plan or
substantially similar coverage, on file at the offices of the Company
2. Dental Insurance Benefits: Fortis Benefits Insurance Company
Participation Number 2000209 or substantially similar coverage, on file at the
offices of the Company.
3. Life and Accidental Death and Dismemberment Plan: UNUM Life Insurance
Company of America Policy Number 107650-012 or substantially similar coverage,
on file at the offices of the Company
4. 401K Savings Plan: DVL, Inc. Savings Plan dated January 1, 1987, as
amended, on file at the offices of the Company
5. Vacation and sick/personal time: 4 weeks vacation for each Employment
Year, which may not be carried over from year to year if unused.
6. Such other benefits which may, from time to time, be provided by the
Company to the senior executives of the Company.
5
EXHIBIT A
---------
INDEMNIFICATION AGREEMENT
-------------------------
THIS INDEMNIFICATION AGREEMENT, made and entered into the 16th day of
April, 1997 ("Agreement"), by and between DVL, Inc., a Delaware corporation
(the "Company", which term shall include any one or more of its subsidiaries
where appropriate), and ▇▇▇▇ ▇▇▇▇▇▇▇ ("Indemnitee"):
WHEREAS, highly competent persons are more reluctant to serve publicly-
held corporations as directors or officers or in other capacities unless they
are provided with adequate protection against inordinate risks of claims and
actions against them arising out of their service to, and activities on behalf
of, such corporation; and
WHEREAS, the statutes and judicial duties regarding officers' and
directors' duties are often difficult to apply, ambiguous or conflicting and
therefore fail to provide such persons with adequate and reliable knowledge
of legal risks to which they are exposed or information regarding the proper
cause of action to take; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that such difficulty is detrimental to the best interests of the
Company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, the Company believes it is unfair for the directors and
officers to assume the risk of huge judgments and other expenses which may
occur in cases in which the director or officer acted in good faith; and
WHEREAS, Section 145 of the General Corporation law of Delaware
("Section 145") under which the Company is organized, empowers the Company to
indemnify its officers and directors by agreement and expressly provides that
the indemnification provided by Section 145 is not exclusive; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to
serve the Company free from undue concern that they will not be so
indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to
take on additional service for or on behalf of the Company on the condition
that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS FOR PURPOSES OF THIS AGREEMENT:
(a) "Change in Control" means a change in control of the Company that
would be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation 14A (or in response to any similar item or similar schedule or
form) promulgated under the Securities Exchange Act of 1934 (the "Act"),
whether or not the Company is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change in Control shall
be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities without the prior approval of at least
two-thirds of the Board in office immediately prior to such person attaining
such percentage interest; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as
a consequence of which members of the Board in office immediately prior to
such transaction or event constitute less than two-thirds of the Board
thereafter; (iii) during any period of twenty-four (24) consecutive months,
individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least two-
thirds of the Board; or (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 (in one transaction or a series of transactions)
of all or substantially all of the Company's assets.
(b) "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) a person (including the
Company) publicly announces a legitimate intention to take or to consider
taking actions which if consummated would constitute a Change in Control;
(iii) any person, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, who is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of the Company's then
outstanding Voting Securities, increases his beneficial ownership of such
securities by five percentage points or more over the percentage so owned by
such person; or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(c) "Corporate Status" describes the status of a person who is or was
or has agreed to become a director or officer of the Company.
(d) "Disinterested Directors" means a director of the Company who is
and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(e) "Proceeding" includes any threatened, pending or completed inquiry,
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative, except one initiated by an
Indemnitee pursuant to Section 12(a) of this Agreement to enforce his rights
under this Agreement.
(f) "Expenses" includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements, other out-of-pocket costs and reasonable compensation
for time spent by the Indemnitee for which he is not otherwise compensated by
the Company or any third party, provided that the rate of compensation and
estimated time involved is approved in advance by the Board), actually and
reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a Proceeding (including amounts paid in
2
settlement by or on behalf of Indemnitee), or the prosecution of an action or
proceeding, including appeals, to establish or enforce a right to
indemnification under this Agreement, Section 145 or otherwise. Expenses as
defined herein, shall not include any judgments, fines, or penalties actually
levied against the Indemnitee.
(g) "Independent Counsel" means (i) any law firm or member of a law
firm which the Board may designate from time to time provided that the law
firm or member of the law firm so designated is experienced in matters of
corporate law and neither presently is, nor in the past five years has been,
retained to represent: (A) the Company or Indemnitee in any matter material
to either such party, or (B) any other party to the Proceeding giving rise to
a claim for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement arising on or
after the date of this Agreement, regardless of when the Indemnitee's act or
failure to act occurred.
2. SERVICES BY INDEMNITEE.
Indemnitee agrees to serve or continue to serve as an officer of the
Company so long as he is duly appointed or elected and qualified in accordance
with the applicable provisions of the By-Laws of the Company or until such
time as he tenders his resignation in writing. This Agreement shall not
impose any obligation on the Indemnitee or the Company to continue the
Indemnitee's position with the Company beyond any period otherwise applicable,
nor to create any right to continued employment of the Indemnitee in any
capacity.
3. GENERAL.
The Company shall indemnify, and shall advance Expenses to Indemnitee
as provided in this Agreement and to the fullest extent permitted by law.
4. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE
RIGHT OF THE COMPANY.
Indemnitee shall be entitled to the rights of indemnification provided
in this Section 4 if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any Proceeding, other than a Proceeding by
or in the right of the Company. Pursuant to this Section 4, Indemnitee shall
be indemnified against Expenses, including amounts paid in settlement, as well
as any judgments, fines and penalties levied or awarded against him in
connection with such Proceeding or any claim, issue or matter therein, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.
5. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.
Indemnitee shall be entitled to the rights of indemnification provided
in this Section 5, if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any threatened, pending or completed
Proceeding brought by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section, Indemnitee shall be indemnified against
Expenses actually incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably believed
3
to be in, or not opposed to, the best interests of the Company.
Notwithstanding the foregoing, no indemnification against such Expenses shall
be made in respect of any claim, issue or matter as to which Indemnitee shall
have been adjudged to be liable to the Company if such indemnification is not
permitted by the laws of the State of Delaware or other applicable law;
provided, however, that indemnification against Expenses nevertheless shall
be made by the Company in such event to the extent that the court in which
such Proceeding shall have been brought or is pending, shall determine.
6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY
OR PARTLY SUCCESSFUL.
Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually incurred by him or
on his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section, but without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal or withdrawal,
with or without prejudice, shall be deemed to be a successful result as to
such claim, issue or matter.
7. ADVANCE OF EXPENSES.
The Company shall advance all reasonable Expenses incurred by or on
behalf of Indemnitee in connection with any Proceeding within twenty days
after the receipt by the Company of a statement(s) from Indemnitee requesting
such advance(s) from time to time, whether prior to or after final disposition
of such Proceeding. Such statement or statements shall evidence or reflect
the Expenses incurred by Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
expenses advanced if it is determined ultimately that Indemnitee is not
entitled to be indemnified against such Expenses.
8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. Promptly upon receipt of such a request for
indemnification, the Secretary of the Company shall advise the Board of
Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant
to Section 8(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case
as follows: (i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board of Directors, a copy of which shall
be delivered to Indemnitee (unless Indemnitee shall request that such
determination be made by the Board of Directors, in which case the
determination shall be made in the manner provided below in clauses (ii) or
(iii)); (ii) if a Change of Control shall not have occurred, (A) by the Board
by a majority vote of a quorum consisting of Disinterested Directors, or (B)
4
if a quorum of the Board consisting of Disinterested Directors is not
obtainable or, even if obtainable, if such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; (iii) as provided
in Section 9(B) of this Agreement; and, if it is determined that Indemnitee
is entitled to indemnification, payment to Indemnitee shall be made within
(10) days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification. Any costs or Expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating
shall be borne by the Company (regardless of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) hereof, and no
counsel shall have been designated previously by the Board or the Independent
Counsel so designated is unwilling or unable to serve, then (i) if no Change
of Control shall have occurred, the Independent Counsel shall be selected by
the Board and the Company shall give written notice to Indemnitee advising him
of the identity of the Independent Counsel so selected; (ii) if a Change of
Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board, in which event the preceding sentence shall apply), and Indemnitee
shall give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within 7 days after such written notice of selection
shall have been given, deliver to the Company or to Indemnitee, as the case
may be, a written objection to such selection. Such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet the
requirement of "Independent Counsel" as defined in this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected or if
selected, shall have been objected to, in accordance with this Section
8(c),either the Company or Indemnitee may petition the Court of Chancery of
the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to
the other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person
as the Court shall designate, and the person with respect to whom an objection
is favorably resolved or the person so appointed shall act as Independent
Counsel under Section 8(b) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with the performance of his responsibilities
pursuant to Section 8(b) hereof, and the Company shall pay all reasonable fees
and Expenses incident to the implementation of the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected
or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 12 hereof, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
5
9. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that the
Indemnitee is entitled to indemnification under this Agreement if the
Indemnitee has submitted a request for indemnification in accordance with
Section 8(a) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making of any
determination contrary to that presumption by any person, persons or entity.
(b) If within 30 days after receipt by the Company of the request
for indemnification, the Board shall not have made a determination under
Section 8(b)(i) or 8(b)(ii)(A) with regard thereto, the requisite
determination of entitlement to indemnification shall be deemed to have been
made in favor of the Indemnitee who then shall be entitled to such
indemnification. The foregoing provisions of this Section 9(b) shall not
apply if the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 8(b)(i) or 8(b)(ii)(B) of this
Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of the
Indemnitee to indemnification or create a presumption that the Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in,
or not opposed to, the best interest of the Company or, with respect to any
criminal Proceeding, that the Indemnitee had reasonable cause to believe that
his conduct was unlawful.
10. ASSUMPTION OF DEFENSE.
In the event the Company shall be obligated to pay the Expenses of
any Proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such Proceeding, with counsel reasonably
acceptable to the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this Agreement
for any fees of counsel subsequently incurred by the Indemnitee with respect
to the same Proceeding, provided that (i) the Indemnitee shall have the right
to employ his counsel in such Proceeding at the Indemnitee's expense; and (ii)
if (a) the employment of counsel by the Indemnitee has been previously
authorized in writing by the Company, (b) the Company shall have reasonably
concluded that there may be a conflict of interest between the Company and the
Indemnitee in the conduct of any such defense, or (c) the Company shall not,
in fact, have employed counsel to assume the defense of such Proceeding, the
fees and Expenses of the Indemnitee's counsel shall be at the expense of the
Company.
11. ESTABLISHMENT OF A TRUST.
(a) In the event of a Potential Change in Control, the Company, upon
written request by the Indemnitee, shall create a trust for the benefit of the
Indemnitee and from time to time upon written request of the Indemnitee shall
fund such trust in an amount sufficient to satisfy any and all Expenses which
at the time of each such request it is reasonably anticipated will be incurred
in connection with a Proceeding for which the Indemnitee is entitled to rights
of indemnification under Section 4 or 5 hereof, and any and all judgments,
fines, penalties and settlement amounts of any and all proceedings for which
6
the Indemnitee is entitled to rights of indemnification under Section 4 or 5
from time to time actually paid or claimed, reasonably anticipated or proposed
to be paid. The amount or amounts to be deposited in the trust pursuant to
the foregoing funding obligation shall be determined by the party who would
be required to make the determination of the Indemnitee's right to
indemnification under Section 8(b) hereof (the "Reviewing Party"). The terms
of the trust shall provide that upon a Change in Control (i) the trust shall
not be revoked or the principal thereof invaded, without the written consent
of the Indemnitee, (ii) the trustee shall advance, within two business days
of a request by the Indemnitee, any and 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
Section 7 hereof), (iii) the trust shall continue to be funded by the Company
in accordance with the funding obligation set forth above, (iv) 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 (v) 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 Indemnitee has been fully indemnified
under the terms of this Agreement. The trustee shall be an institutional
trustee with a highly regarded reputation chosen by the Indemnitee. Nothing
in this Section 11 shall relieve the Company of any of its obligations
hereunder.
(b) Nothing contained in this Section 11 shall prevent the Board in
its discretion at any time and from time to time, upon request of the
Indemnitee, from providing security to the Indemnitee for the Company's
obligations hereunder through an irrevocable line of credit, funded trust as
described in Section (a) above, or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.
12. REMEDIES OF INDEMNITEE.
(a) In the event that any one or more of the following events shall
have occurred: (i) a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement; (ii) Expenses are not advanced timely in accordance with Section
7 of this Agreement; (iii) the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) of this
Agreement and such determination shall not have been made and delivered in a
written opinion within 90 days after receipt by the Company of the request for
indemnification; (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten days after receipt by the Company of
a written request therefor; (v) payment of indemnification is not made within
ten days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 9(b) of this Agreement; and/or (vi) the Company fails to comply with
its obligations under Section 11(a) with regard to the establishment or
funding of a trust for Expenses, the Indemnitee shall be entitled to an
adjudication of his entitlement to such indemnification, advancement of
Expenses or the establishment and funding of the trust in an appropriate court
of the State of Delaware, or in any other court of competent jurisdiction.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association. Indemnitee shall commence such proceeding seeking
an adjudication or an award in arbitration within 180 days following the date
on which Indemnitee first has the right to commence such proceeding pursuant
to this Section 12. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
7
(b) Whenever a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification, the judicial
proceeding or arbitration commenced pursuant to this Section 12 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits
and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification
or advancement of Expenses, as the case may be, in any judicial proceeding or
arbitration commenced pursuant to this Section 12.
(c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 12
absent (i) a misstatement by Indemnitee of a material fact, or an omission of
a material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 12 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 12 seeks
a judicial adjudication or an award in arbitration to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee shall
be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the
definition of Expenses in this Agreement) actually incurred by him in
connection with obtaining such judicial adjudication or arbitration, but only
if he prevails therein. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but
not all of the indemnification or advancement of Expenses sought, the Expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
13. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE:
SUBROGATION.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Company's certificate of incorporation or by-laws, any other
agreement, a vote of stockholders or a resolution of directors, or otherwise.
This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as an officer
or director of the Company, or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 12 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of Indemnitee and his heirs,
executors and administrators.
8
(b) (i) To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors and officers of the
Company, Indemnitee shall be covered by such policy or policies in accordance
with the terms thereof to the maximum extent of the coverage available for any
such director or officer under such policy or policies. The Company shall
take all necessary or appropriate action to cause such insurers to pay on
behalf of the Indemnitee all amounts payable as a result of the commencement
of a proceeding in accordance with the terms of such policy.
(ii) For a period of three years after the date the Indemnitee
shall have ceased to serve as an officer or director of the Company, the
Company will provide officers and directors liability insurance for Indemnitee
on terms no less favorable than the terms of the liability insurance which the
Company then provides to the current officers and directors, provided that the
Company provides officers and directors liability insurance to its current
officers and directors, and provided further that the annual premiums for the
liability insurance to be provided to the Indemnitee do not exceed by more
than 50% the premium charged for the coverage available for any of the
Company's current officers and directors.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee otherwise actually has received such payment under any insurance
policy, contract, agreement or otherwise.
14. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby; and (b) to the fullest extent
possible the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
15. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF
EXPENSES.
Except as otherwise provided specifically herein, Indemnitee shall
not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding, or any claim herein, brought or made
by him against the Company.
16. HEADINGS.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement
or to affect the construction thereof.
9
17. MODIFICATION AND WAIVER.
This Agreement may be amended from time to time to reflect changes
in Delaware law or for other reasons. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver or any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
18. NOTICE BY INDEMNITEE.
Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter which may
be subject to indemnification or advancement of Expenses covered hereunder;
provided, however, that the failure to give any such notice shall not
disqualify the Indemnitee from indemnification hereunder.
19. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand to the party to whom said notice or other communication
shall have been directed, or (ii) mailed by certified or registered mail with
postage paid.
(a) If to Indemnitee, to:
▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to the Corporation, to:
DVL, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: President
or to such other address as may have been furnished to Indemnitee by the
Company or to the Company by Indemnitee, as the case may be.
20. GOVERNING LAW.
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ATTEST: DVL, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------- -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇▇▇▇▇▇▇, President
INDEMNITEE:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
11