December 16, 2009 Axcan Holdings Inc. Mont-Saint-Hilaire, QC J3H 6C4 Re: Advancement and Indemnification Rights In light of recent court decisions concerning the rights of corporate directors and officers (including directors designated by sponsor...
Exhibit
10.24
December
16, 2009
Axcan
Holdings Inc.
000
Xxxxxxxxx Xxxxxxx
Mont-Saint-Hilaire,
QC J3H 6C4
Re: Advancement and
Indemnification Rights
In light
of recent court decisions concerning the rights of corporate directors and
officers (including directors designated by sponsor shareholder investors) to
advancement of expenses and indemnification, TPG Capital, L.P. ("TPG") and Axcan
Holdings Inc. (the "Company" or "Axcan") have agreed
to enter into this Letter Agreement (the "Agreement") to
clarify their understandings with respect to certain
matters. Capitalized terms not defined elsewhere in this Agreement
are used herein as defined in Section
3.
This
Agreement clarifies certain rights of (i) TPG, (ii) any TPG Affiliate or other
persons or entities providing management, advisory, consulting or other services
at the direction or request of TPG or any TPG Affiliate to or for the benefit of
the Company or any successors or direct or indirect parents or subsidiaries of
the Company (collectively, "Axcan Companies")
(iii) any Fund; (iv) any persons designated by TPG, any TPG Affiliate or any
Fund to serve as a director, officer, board observer, partner, trustee,
fiduciary, manager, employee, agent or functional or foreign equivalent of the
foregoing, of or to any of the Axcan Companies or of or to any partnership or
joint venture of which any Axcan Company is a partner or member (collectively,
the "TPG
Designees"); and (v) any direct or indirect partners (including
general partners), shareholders, members (including managing members),
controlling persons, directors, officers, fiduciaries, managers,
employees and agents of each of the foregoing (those persons and
entities identified in (i), (ii), (iii), (iv) and (v) are herein referred to
collectively as the "Indemnitees," and
individually as an "Indemnitee"), where
such rights exist under applicable law or pursuant to an Organizational
Document, Management Agreement or any other agreement or document of an Axcan
Company or to which an Axcan Company is a party (herein referred to collectively
as the "Axcan
Indemnity Undertakings"). For clarity, this Agreement is not
an Axcan Indemnity Undertaking.
The
parties intend that (i) the Axcan Companies are and shall at all times be the
indemnitors of first resort with respect to any and all matters for which
advancement of expenses and indemnification are provided by the Axcan Companies
to or on behalf of any Indemnitee, without regard to the time of any related
claims and liabilities or of any act, statement or omission relating thereto,
(ii) the advancement of expenses and/or indemnity for each Indemnitee shall be
on a primary basis, and (iii) any Indemnitee may be expected to seek advancement
of expenses and/or indemnification from any other potential source of such
advancement or indemnification (including from any other Indemnitee) only if,
and to the extent, that the Axcan Companies are not legally required and/or
financially unable to advance expenses and/or indemnify, as the case may be, to
or on behalf of such Indemnitee.
In
consideration of the mutual agreements herein contained, and other good and
valuable consideration – including TPG's agreement (or the agreement of any TPG
Affiliate) to provide management, advisory or other services to the Axcan
Companies and the agreement of TPG Designees to serve one or more Axcan
Companies – the receipt and sufficiency of which is hereby acknowledged, all
parties intending to be legally bound, hereby agree as follows:
1. Company is Primary
Indemnitor.
Each of
the undersigned Axcan Companies hereby acknowledges and agrees that (a) each of
the undersigned Axcan Companies is an indemnitor of first resort with
respect to an Axcan Indemnity Undertaking ; (b) the obligations of the
Axcan Companies to each Indemnitee under Axcan Indemnity Undertakings are
primary, and any obligations of TPG, any TPG Affiliate or any Fund or other
Indemnitee to provide advancement of expenses or indemnification for any Losses
incurred by Indemnitee and for which any Axcan Company is obligated to indemnify
an Indemnitee under an Axcan Indemnity Undertaking are secondary, and
(c) if TPG, or any TPG Affiliate, Fund or other Indemnitee, is obligated to pay,
or pays, or causes to be paid for any reason, any expense or Loss which any
Axcan Company is otherwise obligated to pay to or on behalf of Indemnitee under
an Axcan Indemnity Undertaking, then (x) such TPG, TPG Affiliate, Fund or other
Indemnitee, as the case may be, shall be fully subrogated to and otherwise
succeed to all rights of Indemnitee with respect to such payment, including with
respect to any rights to claim such amounts from any of the Axcan Companies and
(y) each undersigned Axcan Company shall jointly and severally guarantee
performance of this Agreement by the Axcan Companies.
2. Specific Waiver of
Contribution, etc.
Each
undersigned Axcan Company hereby unconditionally and irrevocably waives,
relinquishes and releases (and covenants and agrees not to exercise, and to
cause each affiliate of any Axcan Company not to exercise), any
claims that any Axcan Company may now have or hereafter acquire
against any Fund or other TPG Affiliate, whether pursuant to any right of
contribution, subrogation, indemnification or otherwise, to require
it to reimburse any expense or Loss which any Axcan Company is obligated to pay
another Indemnitee under an Axcan Indemnity Undertaking.
3. Definitions. As
used in this Agreement, the phrase "including" shall not be deemed to be a term
of limitation but rather shall be construed to mean "including, without
limitation" and the following terms are used with the meaning set forth
herein:
(a)
|
"Losses"
means any and all damages, judgments, liabilities, assessments, fines,
penalties, amounts paid in settlement, fees and costs (including attorneys
fees and costs) or other losses.
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(b)
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"Management
Agreement" means any advisory, management, monitoring or other
similar or equivalent agreement.
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(c)
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"Fund" means any
investment fund formed or managed by TPG or any TPG Affiliate or for which
TPG or any TPG Affiliate serves as an investment adviser including without
limitation TPG Partners V, L.P., and any other partnership, limited
liability company or other legal entity that is a TPG Affiliate which
directly or indirectly owns equity securities of the Company or any other
Axcan Company.
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(d)
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"Organizational
Document" means an entity's charter, by-laws, partnership
agreement, limited liability company agreement, operating agreement,
indemnification agreement, or other similar or equivalent agreement or
document.
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(e)
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"TPG Affiliate"
means any entity that, directly or indirectly, (i) is controlled by, (ii)
controls or (iii) is under common control with, TPG; provided that, under
no circumstances shall any portfolio company of TPG (including any Axcan
Company) be deemed a TPG Affiliate
hereunder.
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4.
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Miscellaneous.
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(a)
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This
Agreement may be amended, modified, extended or terminated (and the
provisions hereof may be waived) only by a written agreement specifically
identified as such and signed by TPG and the relevant Axcan
Company. No oral amendment, modification or waiver of this
Agreement shall be effective.
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(b)
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An
Indemnitee's rights under this Agreement and any Axcan Indemnity
Undertaking that gives rise to indemnification and/or advancement rights
are present contractual rights that shall fully vest upon any Indemnitee's
first service as a director, officer, board observer, fiduciary, partner,
trustee, manager, employee, agent or functional or foreign equivalent of
any of the foregoing of any of the Axcan Companies. No
amendment, alteration or repeal of this Agreement or any other such
agreement or document or of any provision hereof or thereof validly
effected shall limit or restrict any right of Indemnitee under this
Agreement or such agreement or document in respect of any act, omission or
statement of such Indemnitee occurring prior to such amendment, alteration
or repeal. No right under this Agreement may be exercised by or with
respect to an Indemnitee after a period ending on the sixth (6th)
anniversary of the date such Indemnitee ceased being a director, officer,
board observer, fiduciary, partner, trustee, manager, employee, agent or
functional or foreign equivalent of any of the foregoing of any of the
Axcan Companies
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(c)
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Nothing
in this Agreement shall be construed to require: (i) TPG, any
TPG Affiliate or any other person or entity to continue to provide
management, advisory, consulting or other services, or (ii) any TPG
Designee to continue to serve as a director, officer or agent of any Axcan
Company (or in any other capacity). No Indemnitee's rights
hereunder shall be limited or impaired in any way if such Indemnitee
ceases, for any reason, to serve or provide services to any Axcan
Company.
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(d)
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To
the extent permitted by applicable choice of law principles, this
Agreement and all claims arising out of or based upon this Agreement or
relating to the subject matter hereof shall be governed by and construed
in accordance with the substantive laws of the State of Delaware without
giving effect to any choice or conflict of law principles or rules that
would result in the application of the domestic substantive law of any
other jurisdiction.
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(e)
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Except
as, and to the extent, expressly provided herein, (i) no right or remedy
herein conferred is intended to be exclusive of any other right or remedy,
and every other right and remedy shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise, so long as such right or remedy does not
conflict with any right or remedy provided hereunder, (ii) any and
all rights to advancement of expenses and/or indemnification to which each
Indemnitee has ever been, is or may in the future be entitled from the
Axcan Companies shall remain unchanged by this Agreement and (iii) the
assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
right or remedy. To the extent that any term or condition of
this Agreement conflicts with any term or condition under any Axcan
Indemnity Undertaking or under any other agreement or document to which
any of the Axcan Companies and an Indemnitee are parties or by which
they are otherwise together bound with respect to the subject
matter of this Agreement, the terms and conditions of this Agreement shall
control.
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(f)
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Each
Indemnitee that is not a direct party hereunder is and shall be considered
an express third-party beneficiary hereunder and shall be entitled to
enforce this Agreement to the same extent as a party hereunder provided it
provides prior written notice to the Axcan Companies of its intention to
seek the benefit of this Agreement.
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(g)
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If
any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including each portion of any section or subsection 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; (ii) such provision or
provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties
expressed herein; and (iii) to the fullest extent possible, the provisions
of this Agreement (including each portion of any section or subsection of
this Agreement containing any such provision held to 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
thereby.
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(h)
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This
Agreement may be executed in any number of counterparts and by each of the
parties in separate counterparts, each of which when so executed will be
deemed to be an original and all of which together will constitute one and
the same instrument.
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Very truly yours,
TPG
Capital, L.P.
By: Tarrant
Capital, LLC
By: _/s/______________________________
Name: Xxxxx
X. Xxxx
Title: Vice
President and Secretary
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ACKNOWLEDGED
AND AGREED TO as of the date of this letter.
Axcan
Holdings, Inc.
By: __/s/_____________________________
Name:
Title:
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Axcan
Pharma Inc.
By: __/s/_____________________________
Name:
Title
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Axcan
Pharma US, Inc.
By: __/s/_____________________________
Name:
Title