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Exhibit 10.1
EXECUTION COPY
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INDEMNIFICATION AGREEMENT
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THIS AGREEMENT ("Agreement") is made and entered into as of
this
_____ day of October, 2008 between K-V Pharmaceutical Company, a
Delaware
corporation (the "Company"), and ________________________
("Indemnitee").
RECITALS
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WHEREAS, Indemnitee is serving as a director of the Company,
and as such is performing a valuable service for the Company;
and
WHEREAS, competent and experienced persons are becoming
increasingly reluctant to serve publicly-held corporations as
directors unless
they are provided with adequate protection through liability
insurance and
adequate company indemnification against risks of claims and
actions against
them arising out of their service to the corporation; and
WHEREAS, the Board of Directors has determined that the
ability to attract and retain qualified persons to serve as
directors is in
the best interests of the Company and its stockholders, and that
the Company
should act to assure such persons that there will be adequate
certainty of
protection through insurance and indemnification against risks of
claims and
actions against them arising out of their service to and activities
on behalf
of the Company; and
WHEREAS, Section 145 of the General Corporation Law of the
State of Delaware (the "General Corporation Law") permits the
Company to
indemnify and advance expenses to its officers and directors and to
indemnify
and advance expenses to persons who serve at the request of the
Company as
directors, officers, employees, or agents of other corporations
or
enterprises; and
WHEREAS, the Company has adopted provisions in its Bylaws
addressing indemnification and advancement of expenses to its
officers and
directors, and providing that the Company may enter into
indemnification
agreements which specify the rights and obligations of the Company
and such
persons with respect to indemnification, advancement of expenses
and related
matters; and
WHEREAS, the Company desires to have Indemnitee continue to
serve in an Official Capacity (as defined below), and Indemnitee
desires to
continue so to serve the Company, provided, and on the express
condition, that
Indemnitee is furnished with the indemnity and other rights set
forth in this
Agreement.
AGREEMENT
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Now, therefore, in consideration of Indemnitee's continued
service to the Company in Indemnitee's Official Capacity, the
parties hereto
agree as follows:
1.
Definitions. For purposes of this Agreement:
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(a) "Change of
Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be
required to be
reported in response to Item 1.01 of Current Report on Form 8-K (or
in
response to any similar item on any similar schedule or form)
promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"),
whether or
not the Company is then subject to such reporting requirement;
provided,
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however, that, without limitation, such a Change of Control shall
be deemed to
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have occurred if after the Effective Date (i) any "person" (as such
term is
used in Sections 13(d) and 14(d) of the Act) (other than any one or
more of
the direct descendants by blood of Victor M. Hermelin and Minette
Hermelin,
together) becomes the "beneficial owner" (as defined in Rule 13d-3
under the
Act), directly or indirectly, of securities of the Company
representing thirty
percent (30%) 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 members of the Board of Directors in office immediately prior
to such
person attaining such percentage; (ii) the Company is a party to a
merger,
consolidation, liquidation, sale of assets or other reorganization,
or a proxy
contest, as a consequence of which members of the Board of
Directors in office
immediately prior to such transaction or event constitute less than
a majority
of the Board of Directors thereafter; or (iii) during any period of
two (2)
consecutive years, individuals who at the beginning of such period
constituted
the Board of Directors, 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 Section 1(a)(i) or (ii)) whose election by
the Board
of Directors or nomination for election by the Company's
stockholders was
approved by a vote of at least a majority of the directors then
still in
office who either were directors at the beginning of the period or
whose
election or nomination for election was previously approved by such
vote,
cease for any reason to constitute at least a majority of the Board
of
Directors.
(b)
"Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of
which
indemnification or advancement of expenses is sought by
Indemnitee.
(c) "Effective
Date" means the date first written above.
(d) "Expenses"
shall include all direct and indirect costs
including, but not limited to, reasonable attorneys' fees,
retainers, court
costs, transcript costs, fees of experts, witness fees, advisory
fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges,
postage, delivery service fees, and all other disbursements or
expenses of the
types customarily incurred in connection with investigating,
prosecuting,
defending (or preparing to investigate, prosecute or defend) a
Proceeding, or
being or preparing to be a witness in a Proceeding. Notwithstanding
the
foregoing, Expenses incurred in connection with investigating,
prosecuting,
defending (or preparing to investigate, prosecute or defend) a
Proceeding
shall not include any fees, costs, or expenses of more than two
firms of
attorneys with respect to such Proceeding (other than one
additional firm
serving as local counsel if the Indemnitee is required to retain
local counsel
under applicable local law or rules of any jurisdiction in which
such
Proceeding is brought), and in no event shall the Company be
required to
indemnify, or advance expenses to, Indemnitee with respect to any
fees, costs,
or expenses for more than two such firms (and local counsel as
provided
above). Any counsel engaged by Indemnitee with respect to which
Indemnitee
seeks advancement from or indemnification by the Company shall
agree to abide
by any guidelines established by the Company covering the retention
of counsel
by the Company,
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such agreement being a condition precedent to advancement or
indemnification
with respect to the fees, costs, or expenses of any such
counsel.
(e)
"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
presently
is, nor in the past five (5) years has been, retained to represent:
(i) the
Company or Indemnitee in any matter material to either such party,
or (ii) 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. Notwithstanding the foregoing, a law firm or
a member of
a law firm may serve as Independent Counsel for more than one
indemnitee in
relation to a single Proceeding or a series of related
Proceedings.
(f) "Official
Capacity" means Indemnitee's corporate status as
an officer and/or director and any other fiduciary capacity in
which
Indemnitee serves the Company, its subsidiaries and affiliates, its
employee
benefit plans, and any other entity which Indemnitee serves in such
capacity
at the request of the Company's CEO, its Board of Directors or any
committee
of its Board of Directors. "Official Capacity" also refers to all
actions
which Indemnitee takes or does not take while serving in such
capacity.
(g)
"Proceeding" includes any actual, threatened, pending or
completed inquiry, investigation, action, suit, arbitration, or any
other such
actual or threatened action or occurrence, whether civil,
criminal,
administrative or investigative, including any appeal or petition
resulting
from such action or occurrence, whether or not initiated prior to
the
Effective Date, except a proceeding initiated by an Indemnitee
pursuant to
Section 8 of this Agreement to enforce his or her rights under this
Agreement.
2.
Service by Indemnitee. Indemnitee will serve and/or continue
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to serve in Indemnitee's Official Capacity faithfully and to the
best of
Indemnitee's ability so long as Indemnitee has or holds such
Official
Capacity. Indemnitee may at any time and for any reason resign
from
Indemnitee's Official Capacity (subject to any other contractual
obligation or
any obligation imposed by operation of law).
3.
Indemnification.
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(a) General.
Except as otherwise provided in this Agreement, the
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Company shall indemnify Indemnitee to the fullest extent permitted
by the
General Corporation Law as such law may from time to time be
amended if
Indemnitee is or was a party or is or was threatened to be made a
party to any
Proceeding by reason of his or her Official Capacity or by reason
of anything
done or not done by Indemnitee in his or her Official Capacity. The
Company
shall indemnify Indemnitee against all costs, judgments, penalties,
fines,
liabilities, amounts paid in settlement by or on behalf of
Indemnitee in any
Proceeding, and Expenses actually and reasonably incurred by
Indemnitee in
connection with such Proceeding, if Indemnitee is determined to
have met the
standard of conduct set forth in Section 7(a).
(b)
Exceptions. Indemnitee shall receive no indemnification of
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Expenses:
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(i) to the
extent such indemnification of Expenses is
finally determined by a Court of competent jurisdiction
(including through the expiration of applicable appeals
processes) to be expressly prohibited by Delaware law or
the public policies of Delaware;
(ii) to the extent
payment is actually made to Indemnitee
for the amount to which Indemnitee would otherwise have been
entitled under this Agreement pursuant to an insurance
policy, or another indemnity agreement or arrangement from
the Company or other person or entity;
(iii) for an accounting of profits made from the purchase
and sale (or sale and purchase) by Indemnitee of securities
of the Company within the meaning of Section 16(b) of the
Act, or similar provisions of state statutory law or common
law;
(iv) in connection
with any Proceeding, or part thereof
(including claims and permissive counterclaims) initiated by
Indemnitee, except a judicial proceeding pursuant to Section
8 to enforce rights under this Agreement, unless the
Proceeding (or part thereof) was authorized by the Board of
Directors of the Company; and
(v) with respect
to any claim, issue, or matter as to which
Delaware law expressly prohibits such indemnification by
reason of any adjudication of liability of Indemnitee to the
Company, unless and only to the extent that the Delaware
Court of Chancery, or the court in which such action or suit
was brought, shall determine upon application that, despite
an adjudication of liability but in view of all the
circumstances of the case, Indemnitee is entitled to
indemnification for
such Expenses as such court shall deem
proper.
4.
Advancement of Expenses.
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(a) General.
Except as otherwise provided in Section 3(b)(iv) of
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this Agreement, the Company shall advance Expenses to Indemnitee to
the
fullest extent permitted by the General Corporation Law as such law
may from
time to time be amended if Indemnitee is or was a party or is or
was
threatened to be made a party to any Proceeding by reason of his or
her
Official Capacity or by reason of anything done or not done by
Indemnitee in
his or her Official Capacity. The Company shall advance to
Indemnitee Expenses
actually and reasonably incurred by Indemnitee in connection with
such
Proceeding within 15 business days after Indemnitee provides a
statement to
Company requesting an advance and describing in reasonable detail
the Expenses
incurred.
(b)
Undertaking In Connection With Request For Advancement. As a
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condition precedent to the Company's advancement of Expenses to
Indemnitee,
Indemnitee shall provide the Company, in substantially the form
attached as
Exhibit 1, with (i) a written affirmation by such person of his or
her good
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faith belief that he or she has met the standard of conduct
necessary for
indemnification under this Agreement and Section 145 of the
General
Corporation Law, and (ii) an undertaking by or on behalf of
Indemnitee to
reimburse such amount if it is
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finally determined by a court of competent jurisdiction after all
appeals that
Indemnitee is not entitled to be indemnified against such Expenses
by the
Company as provided by this Agreement or otherwise. Indemnitee's
undertaking
to reimburse any such amounts is not required to be secured.
5.
Indemnification for Expenses of Successful Party.
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Notwithstanding the limitations of any other provisions of this
Agreement, to the extent that Indemnitee is successful on the
merits or
otherwise in defense of any Proceeding, or in defense of any claim,
issue or
matter therein, including, without limitation, the dismissal of any
action
without prejudice, or if it is ultimately determined that
Indemnitee is
otherwise entitled to be indemnified against Expenses, Indemnitee
shall be
indemnified against all Expenses actually and reasonably incurred
in
connection therewith. If Indemnitee is partially successful on the
merits or
otherwise in defense of any Proceeding, Indemnitee shall be
indemnified
against all Expenses actually and reasonably incurred in connection
with each
claim, issue, or matter that is successfully resolved on the merits
or
otherwise to the fullest extent permitted by law.
6.
Indemnification for Expenses Incurred in Serving as a Witness.
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Notwithstanding any other provisions of this Agreement, Indemnitee
shall be
entitled to indemnification for and advancement of all Expenses
reasonably
incurred for serving as a witness by reason of Indemnitee's
Official Capacity
in any Proceeding with respect to which Indemnitee is not a
party.
7.
Determination of Entitlement to Indemnification.
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(a) Standard
of Conduct. Except as provided in Section 5 above,
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Indemnitee shall be entitled to indemnification pursuant to this
Agreement
only upon a determination that Indemnitee acted in good faith and
in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests
of the Company, and with respect to any criminal action or
proceeding, had no
reasonable cause to believe that Indemnitee's conduct was
unlawful.
(b) Manner of
Determining Eligibility. Upon written request of
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the Indemnitee for indemnification, the entitlement of Indemnitee
to such
requested indemnification shall be determined by:
(i) the Board of
Directors by a majority vote of
Disinterested Directors, whether or not such majority
constitutes a quorum; or
(ii) a committee of
Disinterested Directors designated by
majority vote of such Disinterested Directors, whether or
not such majority constitutes a quorum; or
(iii) Independent Counsel in a written opinion to the Board
of Directors, or designated committee of the Board of
Directors, with a copy to Indemnitee, which Indepe
