SVU » Topics » INDEMNIFICATION

This excerpt taken from the SVU 8-K filed Jan 24, 2006.

INDEMNIFICATION

 

Section 5.1 SV’s and New Diamond’s Agreement to Indemnify. In addition to any other indemnification provided hereunder, subject to the terms and conditions set forth in this Separation Agreement, from and after the Closing Date, each of SV and New Diamond shall, and New Diamond shall cause each of the New Diamond Entities to, indemnify, defend and hold harmless Onyx, the Company, the other Retained Entities and each of their respective directors, officers, partners, members, employees and other representatives, advisors and agents (collectively, “Representatives”), Subsidiaries and Affiliates (collectively, the “Company Indemnitees”) from and against any and all Indemnifiable Losses of the Company Indemnitees arising out of or resulting from, directly or indirectly, the New Diamond Liabilities and the matters contemplated as being Indemnifiable Losses by Section 2.6 of this Separation Agreement.

 

Section 5.2 Onyx’s and the Company’s Agreement to Indemnify. In addition to any other indemnification provided hereunder, subject to the terms and conditions set forth in this Separation Agreement, from and after the Closing Date, each of Onyx and the Company shall, and shall cause each of the Retained Entities to, indemnify, defend and hold harmless SV, New Diamond and the New Diamond Entities, and each of their respective Representatives, Subsidiaries and Affiliates (collectively, the “New Diamond Indemnitees”) from and against any and all Indemnifiable Losses of the New Diamond Indemnitees arising out of or resulting from, directly or indirectly, the Retained Liabilities and the matters contemplated as being Indemnifiable Losses by Section 2.6 of this Separation Agreement.

 

Section 5.3 Reduction of Indemnifiable Losses for Insurance Benefits Received. For purposes of this Article V, Section 8.2 and Section 8.7, the calculation of any Indemnifiable Loss will reflect the amount of any insurance proceeds or indemnification payments received by the Indemnitee in respect of such Indemnifiable Loss (net of all reasonable costs and expenses incurred by the Indemnitee in recovering such insurance proceeds). Each Indemnitee shall use its commercially reasonable efforts to recover from its insurers or other sources of reimbursement or recovery the maximum portion of any Indemnifiable Loss that is recoverable from such sources.

 

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Section 5.4 Procedure for Indemnification. (a) If an Indemnitee shall receive notice of the assertion by a person who is not a party to this Separation Agreement of any claim or of the commencement by any such person of any Action (a “Third Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification under Section 5.1 or Section 5.2, such Indemnitee shall give such Indemnifying Party prompt notice thereof after becoming aware of such Third Party Claim; provided, that the failure of any Indemnitee to give notice as provided in this Section 5.4 shall not relieve the related Indemnifying Party of its obligations under this Article V, except to the extent that such Indemnifying Party is actually and materially prejudiced by such failure to give notice. Such notice shall describe the Third Party Claim in reasonable detail, and, if practicable, shall indicate the estimated amount of the Indemnifiable Loss that has been or may be sustained or asserted by such Indemnitee.

 

(b) If an Indemnitee gives notice of a Third Party Claim to an Indemnifying Party, the Indemnifying Party shall have 30 days after receipt of notice to elect, at its option, to take responsibility for resolving, and assume and control the defense of, at its own expense and by its own counsel, any such Third Party Claim and shall be entitled to assert any and all defenses available to the Indemnitee to the fullest extent permitted by Law. If the Indemnifying Party shall undertake to defend and resolve any such Third Party Claim, it shall promptly notify the Indemnitee of its intention to do so, and the Indemnitee agrees to cooperate as reasonably requested by the Indemnifying Party and its counsel in the resolution of, or defense against, any such Third Party Claim; provided, however, that the Indemnifying Party shall not admit any liability with respect to such Third Party Claim without the prior written consent of the Indemnitee, and shall not resolve, settle, compromise or discharge any such Third Party Claim without the prior written consent of the Indemnitee (which consent will not be unreasonably withheld or delayed) unless the relief consists solely of the payment of money and includes a provision whereby the plaintiff or claimant in the matter releases the Indemnitees from all liability with respect thereto. Notwithstanding the foregoing, the Indemnitee shall have the right to defend (but not admit liability, compromise, settle or otherwise resolve such Third Party Claim without the prior written consent of the Indemnifying Party) any Third Party Claim as to itself by its own separate counsel, and the Indemnifying Party shall pay the reasonable fees, costs and expenses of such separate counsel, as incurred, if the Indemnitee shall have determined in good faith that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by the Indemnifying Party inappropriate. Further, the Indemnitee shall have the right to employ separate counsel and to participate in the defense of any Third Party Claim (though such separate counsel shall not appear of record), at the expense of the Indemnitee (unless the Indemnifying Party agrees to pay the fees and expenses of such separate counsel). In any event, the Indemnitee and Indemnifying Party and their counsel shall cooperate in the defense of any Third Party Claim and keep such persons informed of all developments relating to any such Third Party Claim, and provide copies of all relevant correspondence and documentation relating thereto consistent with applicable rules of privilege and legal ethics. All costs and expenses incurred in connection with the Indemnitee’s cooperation shall be paid by the Indemnifying Party, as incurred. If the Indemnifying Party receiving a notice of Third Party Claim does not elect timely to take responsibility for resolving, and defend, such Third Party Claim or does not defend such Third Party Claim in good faith, the Indemnitee shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnifying Party’s expense, to defend such Third Party Claim; provided, however, that (1) the Indemnitee shall not have any obligation to participate in the defense of, or defend, any such Third Party Claim; (2)

 

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the Indemnitee’s defense of or participation in the defense of any such claim shall not in any way diminish or lessen the obligations of the Indemnifying Party under this Article V; and (3) the Indemnitee shall not resolve, settle, compromise or discharge any such Third Party Claim without the prior written consent of the Indemnifying Party.

 

Section 5.5 Pending Litigation; New Litigation. Following the Closing Date, (a) Onyx and/or one or more if its Designated Affiliates shall have exclusive authority and control over the investigation, prosecution, defense and appeal of (1) all Actions brought against the Company or its Subsidiaries listed on Schedule 1.12 of this Separation Agreement and all pending Actions brought against the Company or its Subsidiaries exclusively relating to the Retained Business and (2) all Actions brought against the Company or its Subsidiaries brought after the date hereof that primarily relate to the Retained Business (the Actions described in the foregoing clauses (1) and (2) each, a “Retained Action”), and may settle or compromise, or consent to the entry of any Judgment with respect to, any such Action without the consent of any other party, provided, that in the event that such Retained Action involves the potential indemnification of an Indemnified Director or Officer, Onyx or one or more of its Designated Affiliates, as applicable, shall not settle, compromise or consent to the entry of any judgment in any actual or threatened claim, demand, action, suit, proceeding, inquiry or investigation in connection with a Retained Action in respect of which indemnification has been or could be sought by such Indemnified Director or Officer under the Transaction Agreements unless such settlement, compromise or judgment includes an unconditional release of such Indemnified Director or Officer from all liability arising out of such claim, demand, action, suit, proceeding, inquiry or investigation or such Indemnified Director or Officer otherwise consents thereto, and (b) New Diamond and/or one or more of its Designated Affiliates shall have exclusive authority and control over the investigation, prosecution, defense and appeal of (1) all pending Actions brought against the Company or its Subsidiaries listed on Schedule 1.13 of this Separation Agreement, (2) all of the Actions brought against the Company or its Subsidiaries as of the date hereof that are not Retained Actions (the Actions described in the foregoing clauses (1) and (2) each, a “New Diamond Action”) (3) all Shared Transaction Litigation Liabilities, (4) all Unallocated Actions (as defined below) and (5) all Actions that constitute Specified Standalone Drug Liabilities, and may settle or compromise, or consent to the entry of any Judgment with respect to, any such Action without the consent of any other party; provided, that, notwithstanding anything to the contrary, neither Onyx nor New Diamond (nor any of their respective Subsidiaries or Affiliates) may settle or compromise, or consent to the entry of any Judgment with respect to, any Retained Action, New Diamond Action, Unallocated Action, Shared Transaction Litigation Liability or any Action that constitutes a Specified Standalone Drug Liability, without the prior written consent of the other party if such settlement, compromise or consent to such Judgment (i) includes any form of relief binding upon such other party or its Affiliates or their respective businesses or assets, (ii) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such other party (and any Affiliate of such other party subject to such Action) of a full and final release from all Liability in respect of such claim or litigation or (iii) in the case of a Shared Transaction Litigation Liability, requires any cash payment for damages or otherwise by any party to this Separation Agreement other than the settling party. If, after the date hereof, any Action other than those Retained Actions, New Diamond Actions and Shared Transaction Litigation Liabilities as described above shall be brought against the Company or any of its Subsidiaries, such Action

 

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shall be deemed to be “Unallocated Actions” for purposes of this Separation Agreement unless such Action shall constitute a Specified Standalone Drug Liability.

 

Section 5.6 Remedies Exclusive. From and after the Closing and except as otherwise specifically provided herein (including Articles IV and VIII), the rights to indemnification provided in this Article V shall be the exclusive monetary remedy for any New Diamond Liabilities or Retained Liabilities; provided that nothing herein shall preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party in the event of fraud or in the event of an Indemnifying Party’s failure to comply with its indemnification obligations hereunder.

 

Section 5.7 Retained Business Price Adjustment. The parties agree to treat any indemnity payments pursuant to this Separation Agreement for Tax purposes, as an adjustment to the Retained Business Price, as applicable, or as payments that are deductible by the payor, as appropriate, unless otherwise required by applicable Tax Law.

 

Section 5.8 Exclusion of Tax Indemnities. Notwithstanding anything to the contrary in this Article V or in Article VI, the provisions of Article V and Article VI shall not apply to Tax indemnification matters and indemnification shall not be provided under Article V or Article VI for Taxes, all such matters and any such indemnification being governed by Article IV.

 

ARTICLE VI

 

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