INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (“ Agreement ”) is
made as of ________ __, 20___ (the “ Effective Date
”) by and between Medicis Pharmaceutical Corporation, a
Delaware corporation (the “ Company ”), and
_________ who serves as a [director and/or officer] of the Company
(“ Indemnitee ”).
WHEREAS, highly
competent persons have become more reluctant to serve as directors
or officers of companies unless they are provided with adequate
protection through insurance and/or indemnification against the
risks of claims being asserted against them arising out of their
service to and activities on behalf of such companies;
WHEREAS, the Board
of Directors of the Company (the “ Board ”) has
determined that, in order to help attract and retain qualified
individuals as directors and officers, the best interests of the
Company and its stockholders will be served by attempting to
maintain, on an ongoing basis, at the Company’s sole expense,
insurance to protect persons serving the Company and its
subsidiaries as directors or officers from certain
liabilities;
WHEREAS, the Board
has determined that, in order to help attract and retain qualified
individuals as directors and officers, the best interests of the
Company and its stockholders will be served by assuring such
individuals that the Company will indemnify them to the maximum
extent permitted by law;
WHEREAS, the
Certificate of Incorporation (the “ Charter ”)
of the Company permits indemnification of the officers and
directors of the Company;
WHEREAS, the Board
has determined it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify, and to
advance defense costs on behalf of, 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;
WHEREAS, this
Agreement is a supplement to and in furtherance of the Charter and
shall not be deemed a substitute therefor, nor shall it be deemed
to diminish or abrogate any rights of Indemnitee
thereunder;
WHEREAS, the Board
recognizes that the Indemnitee does not regard the protection
available under the Company’s Charter, bylaws and insurance
program as adequate in the present circumstances, and may not be
willing to serve or continue to serve as a director, officer or in
such other capacity as the Company may request without adequate
protection, and the Company desires Indemnitee to serve in such
capacity; and
WHEREAS,
Indemnitee is willing to serve, and continue to serve, [as a member
of the Board (and any committee thereof)] [or] [as an officer of
the Company], on the condition that he or she be indemnified as
provided for herein.
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as
follows:
1.
Services to the Company. Indemnitee will serve or continue
to serve, at the will of the Company, as a director or officer of
the Company for so long as Indemnitee is duly elected or appointed
or until Indemnitee tenders his or her resignation. This Agreement
shall not serve as a binding commitment on the part of Indemnitee
to continue to serve in such capacity, or on the part of the
Company to cause him or her to be nominated to successive terms as
a director or officer or to not otherwise be removed for cause or
without cause, as permitted under law. This Agreement shall not be
deemed an employment contract between the Company (or any of its
subsidiaries or any Enterprise) and Indemnitee. Indemnitee
specifically acknowledges that Indemnitee’s employment with
the Company (or any of its subsidiaries or any Enterprise), if any,
is at will, and the Indemnitee may be discharged at any time for
any reason, with or without cause, except as may be otherwise
provided in any written employment contract between Indemnitee and
the Company (or any of its subsidiaries or any Enterprise), other
applicable formal severance policies duly adopted by the Board, or,
with respect to service as a director or officer of the Company, by
the Company’s Charter, bylaws, and the General Corporation
Law of the State of Delaware (the “ DGCL
”).
2.
Definitions. As used in this Agreement:
(a)
“ Beneficial Owner ” shall have the meaning
given to such term in Rule 13d-3 issued under the Exchange
Act; provided, however, that Beneficial Owner shall exclude any
Person becoming a Beneficial Owner by reason of the stockholders of
the Company approving a merger of the Company with another
entity.
(b) A
“ Change in Control ” shall be deemed to occur
upon the earliest to occur after the date of this Agreement of any
of the following events:
(i)
Acquisition of Stock by Third Party . Any Person (as defined
below, but excluding any subsidiary or employee benefit plan of the
Company), subsequent to the date of this Agreement, becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing fifteen percent (15%) or more of the combined
voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors, unless
(1) the change in the relative Beneficial Ownership of the
Company’s securities by any Person results solely from a
reduction in the aggregate number of outstanding shares of
securities entitled to vote generally in the election of directors,
or (2) such acquisition was approved in advance by the
Continuing Directors (as defined below) and such acquisition would
not constitute a Change in Control under part (iii) of this
definition;
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(ii)
Change in Board of Directors . Individuals who, as of the
date hereof, constitute the Board, and any new director whose
election by the Board 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 on
the date hereof or whose election for nomination for election was
previously so approved (collectively, the “ Continuing
Directors ”), cease for any reason to constitute at least
a majority of the members of the Board at any time after the date
hereof;
(iii)
Corporate Transactions . The effective date of a
reorganization, merger or consolidation of the Company (a “
Business Combination ”), in each case, unless,
following such Business Combination: (1) all or substantially
all of the individuals and entities who were the Beneficial Owners
of securities entitled to vote generally in the election of
directors immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 51% of the
combined voting power of the then outstanding securities entitled
to vote generally in the election of directors of the Company
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the securities entitled to
vote generally in the election of directors; (2) no Person
(excluding any corporation resulting from such Business
Combination) is the Beneficial Owner, directly or indirectly, of
15% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors
of such corporation except to the extent that such ownership
existed prior to the Business Combination; and (3) at least a
majority of the Board resulting from such Business Combination were
Continuing Directors at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination;
(iv)
Liquidation . The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or
series of agreements for the sale or disposition by the Company of
all or substantially all of the Company’s assets, other than
factoring the Company’s current receivables or escrows due
(or, if such approval is not required, the decision by the Board to
proceed with such a liquidation, sale, or disposition in one
transaction or a series of related transactions); or
(v)
Other Events . There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the
Exchange Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(c)
“ Corporate Status ” shall describe the status
of a person who is or was a director, officer, trustee, partner,
member, fiduciary, employee or agent of the Company or of any other
Enterprise (as defined below), which such person is or was serving
at the request of the Company.
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(d)
“ Disinterested Director ” shall mean a director
of the Company who is not and was not a party to the Proceeding (as
defined below) in respect of which indemnification is sought by
Indemnitee.
(e)
“ Enterprise ” shall mean any corporation,
limited liability company, partnership, joint venture, trust,
employee benefit plan or other enterprise of which Indemnitee is or
was serving at the request of the Company as a director, officer,
trustee, administrator, partner, member, fiduciary, employee or
agent.
(f)
“ Exchange Act ” shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(g)
“ Expenses ” shall include all reasonable
attorneys’ fees, retainers, court costs, transcript costs,
fees of experts and accountants, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or
expenses of the types and amounts customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding (as defined below).
Expenses also shall include costs incurred in connection with any
appeal resulting from any Proceeding (as defined below), including,
without limitation, the premium, security for, and other costs
relating to any bond, supersedeas bond, or other appeal bond or its
equivalent, to the extent permitted by law. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.
(h)
“ Independent Counsel ” shall mean 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
(other than with respect to matters concerning the Indemnitee under
this Agreement, or other indemnitees under similar indemnification
agreements), 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.
(i) References
to “ fines ” shall include any excise tax
assessed on a person with respect to any employee benefit plan
pursuant to applicable law.
(j) References
to “ serving at the request of the Company ”
shall include any service provided at the request of the Company as
a director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent of the Company which imposes duties
on, or involves services by, such director, officer, trustee,
administrator, partner, member, fiduciary, employee or agent with
respect to an employee benefit plan, its participants or
beneficiaries.
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(k)
“ Person ” shall have the meaning set forth in
Sections 13(d) and 14(d) of the Exchange Act; provided, however,
that Person shall exclude (i) the Company and (ii) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a subsidiary of the
Company.
(l) Any
action taken or omitted to be taken by a person for a purpose which
he or she reasonably believed to be in the interests of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have been taken in “ good faith ” and
for a purpose which is “ not opposed to the best interests
of the Company ”, as such terms are referred to in this
Agreement and used in the DGCL.
(m) The
term “ Proceeding ” shall include any
threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed
proceeding, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, including any related appeal, in which
Indemnitee was, is or will be involved as a party or witness or
otherwise by reason of the fact that Indemnitee is or was a
director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent of the Company, by reason of any
action taken or not taken by him or her while acting as director,
officer, trustee, administrator, partner, member, fiduciary,
employee or agent of the Company, or by reason of the fact that he
or she is or was serving at the request of the Company as a
director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent of any other Enterprise, in each case
whether or not serving in such capacity at the time any liability
or expense is incurred for which indemnification, reimbursement, or
advancement of expenses can be provided under this
Agreement.
3.
Indemnity in Third-Party Proceedings. The Company shall
indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 3 if Indemnitee is made, or is
threatened to be made, a party to or a participant in (as a witness
or otherwise) any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant
to this Section 3, Indemnitee shall be indemnified and held
harmless against all judgments, fines, penalties, amounts paid in
settlement (if such settlement is approved in writing in advance by
the Company, which approval shall not be unreasonably withheld)
(including, without limitation, all interest, assessments and other
charges paid or payable in connection with or in respect of any of
the foregoing) (collectively, “Losses”) and Expenses
actually and reasonably incurred by Indemnitee or on his or her
behalf in connection with such Proceeding or any action, discovery
event, claim, issue or matter therein or related thereto, if
Indemnitee acted in good faith, for a purpose which he or she
reasonably believed to be in or not opposed to the best interests
of the Company and, in the case of a criminal Proceeding, in
addition, had no reasonable cause to believe that his or her
conduct was unlawful.
4.
Indemnity in Proceedings by or in the Right of the Company.
The Company shall indemnify Indemnitee in accordance with the
provisions of this Section 4 if Indemnitee is made, or is
threatened to be made, a party to or a participant in (as
a
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witness or
otherwise) any Proceeding by or in the right of the Company to
procure a judgment in its favor. Pursuant to this Section 4,
Indemnitee shall be indemnified and held harmless against all
Expenses actually and reasonably incurred by him or her or on his
or her behalf in connection with the defense or settlement of such
Proceeding or any action, discovery event, claim, issue or matter
therein or related thereto, if Indemnitee acted in good faith, for
a purpose which he or she reasonably believed to be in or not
opposed to the best interests of the Company. No indemnification,
however, shall be made under this Section 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company, unless and only to the extent
that the court in which the Proceeding was brought or, if no
Proceeding was brought in a court, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, Indemnitee fairly and reasonably is
entitled to indemnification for such portion of the Expenses as the
court deems proper.
5.
Indemnification for Expenses Where Indemnitee is Wholly or
Partly Successful. Notwithstanding and in addition to the
provisions of Section 3 and 4 of this Agreement, to the
fullest extent permitted by applicable law and to the extent that
Indemnitee is a party to a Proceeding and is successful, on the
merits or otherwise, in the defense of any claim, issue or matter
therein, the Company shall indemnify and hold harmless Indemnitee
against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection with such successful defense.
For the avoidance of doubt, 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 and reasonably incurred by him or her or on his
or her behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section 5, and without
limitation, the termination of any claim, issue or matter in such a
Proceeding by withdrawal or dismissal, with or without prejudice,
shall be deemed to be a successful result as to such claim, issue
or matter.
6.
Indemnification for Expenses of a Witness. To the fullest
extent permitted by applicable law and to the extent that
Indemnitee is, by reason of his or her Corporate Status, a witness
in or otherwise incurs Expenses in connection with any Proceeding
to which Indemnitee is not a party, he or she shall be indemnified
and held harmless by the Company against all Expenses actually and
reasonably incurred by him or her or on his or her behalf in
connection therewith.
7.
Additional Indemnification Provisions.
(a) Notwithstanding
any limitation in Sections 3, 4, or 5 hereof or in
Section 145 of the DGCL or other applicable statutory
provision, the Company shall indemnify Indemnitee to the fullest
extent permitted by law if Indemnitee is made, or is threatened to
be made, a party to any Proceeding (including a Proceeding by or in
the right of the Company to procure a judgment in its favor)
against all Losses and Expenses actually and reasonably incurred by
Indemnitee in connection with the Proceeding, provided that no
indemnification shall be made under this Section 7(a) on account
of
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Indemnitee’s conduct which constitutes a
breach of Indemnitee’s duty of loyalty to the Company or its
stockholders or is an act or omission not in good faith or which
involves intentional misconduct or a knowing violation of the
law.
(b) Notwithstanding
anything in this Agreement to the contrary, no determination as to
entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the
Proceeding.
(c) For
purposes of Sections 7(a), the meaning of the phrase “
to the fullest extent permitted by law ” shall
include, but not be limited to:
(i) to
the fullest extent authorized or permitted by the then-applicable
provisions of the DGCL or other applicable statutory provision,
that authorize or contemplate indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the
DGCL or other applicable statutory provision, and
(ii) to
the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL or other applicable statutory provision,
adopted after the date of this Agreement that increase the extent
to which a corporation limited liability company or partnership, as
applicable, may indemnify its officers, directors or persons
holding similar fiduciary responsibilities.
(d) Indemnitee
shall be entitled to the prompt payment of all Expenses reasonably
incurred in enforcing successfully (fully or partially) this
Agreement to the extent permitted by applicable law.
8.
Contribution. To the fullest extent permissible under
applicable law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee in whole or in part for any
reason whatsoever, the Company, in lieu of indemnifying Indemnitee,
shall contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be
paid in settlement and/or for Expenses, in connection with any
claim relating to an indemnifiable event under this Agreement, in
such proportion as is deemed fair and reasonable in light of all of
the circumstances of such Proceeding in order to reflect
(i) the relative benefits received by the Company, on the one
hand, and Indemnitee, on the other, as a result of the event(s)
and/or transaction(s) giving cause to such Proceeding; and/or
(ii) the relative fault of the Company, on the one hand (and
its directors, officers, employees and agents) and Indemnitee, on
the other, in connection with such event(s) and/or
transaction(s).
9.
Exclusions. Notwithstanding any provision in this Agreement,
the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against
Indemnitee:
(a) for
which payment actually has been received by or on behalf of
Indemnitee under any insurance policy or other indemnity provision,
except with respect
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