VISTAGEN THERAPEUTICS, INC. INDEMNIFICATION AGREEMENT
Exhibit
10.1
THIS
AGREEMENT is entered into, effective as of January 10, 2019,
between VistaGen Therapeutics, Inc., a Nevada corporation (the
"Company"), and Xxx Xxxxxxxxxx
(“Indemnitee”).
WHEREAS, it is
essential to the Company to retain and attract as directors and
officers the most capable persons available;
WHEREAS, Indemnitee
is a director of the
Company;
WHEREAS, both the
Company and Indemnitee recognize the increased risk of litigation
and other claims currently being asserted against directors and
officers of corporations; and
WHEREAS, in
recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued and
effective service to the Company, and in order to induce Indemnitee
to provide services to the Company as a director, the Company wishes to provide in
this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and,
to the extent insurance is maintained, for the coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies.
NOW,
THEREFORE, in consideration of the above premises and of
Indemnitee's continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound
hereby, the parties agree as follows:
1. Certain
Definitions:
(a) Board: the Board of Directors
of the Company.
(b) 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 Securities Exchange Act of 1934,
as amended), 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, is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 20% or more of the total
voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board and any new director whose election by the Board or
nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) 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 so
approved, cease for any reason to constitute a majority thereof, or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation that would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders
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.
(c) Expenses: any expense,
liability, or loss, including attorneys' fees, judgments, fines,
ERISA excise taxes and penalties, amounts paid or to be paid in
settlement, any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed as
a result of the actual or deemed receipt of any payments under this
Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or
participating in (including on appeal), or preparing for any of the
foregoing in, any Proceeding relating to any Indemnifiable
Event.
-1-
(d) Indemnifiable Event: any event
or occurrence that takes place either prior to or after the
execution of this Agreement, related to the fact that Indemnitee is
or was a director of
the Company, or while a director is or was serving at the request
of the Company as a director, officer, employee, trustee, agent, or
fiduciary of another foreign or domestic corporation, partnership,
joint venture, employee benefit plan, trust, or other enterprise,
or was a director, officer, employee, or agent of a foreign or
domestic corporation that was a predecessor corporation of the
Company or of another enterprise at the request of such predecessor
corporation, or related to anything done or not done by Indemnitee
in any such capacity, whether or not the basis of the Proceeding is
alleged action in an official capacity as a director, officer,
employee, or agent or in any other capacity while serving as a
director, officer, employee, or agent of the Company, as described
above.
(e) Independent Counsel: the person
or body appointed in connection with Section 3.
(f) Proceeding: any threatened,
pending, or completed action, suit, or proceeding (including an
action by or in the right of the Company), or any inquiry, hearing,
or investigation, whether conducted by the Company or any other
party, that Indemnitee in good faith believes might lead to the
institution of any such action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other.
(g) Reviewing Party: the person or
body appointed in accordance with Section 3.
(h) Voting Securities: any
securities of the Company that vote generally in the election of
directors.
2. Agreement to
Indemnify.
(a) General Agreement. In the event
Indemnitee was, is, or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Proceeding by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee from and against any and all Expenses to the fullest
extent permitted by law, as the same exists or may hereafter be
amended or interpreted (but in the case of any such amendment or
interpretation, only to the extent that such amendment or
interpretation permits the Company to provide broader
indemnification rights than were permitted prior thereto). The
parties hereto intend that this Agreement shall provide for
indemnification in excess of that expressly permitted by statute,
including, without limitation, any indemnification provided by the
Company's Articles of Incorporation, its Bylaws, vote of its
shareholders or disinterested directors, or applicable
law.
(b) Initiation of Proceeding.
Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Proceeding initiated by
Indemnitee against the Company or any director of the Company
unless (i) the Company has joined in or the Board has consented to
the initiation of such Proceeding; (ii) the Proceeding is one to
enforce indemnification rights under Section 5; or (iii) the
Proceeding is instituted after a Change in Control (other than a
Change in Control approved by a majority of the directors on the
Board who were directors immediately prior to such Change in
Control) and Independent Counsel has approved its
initiation.
(c) Expense Advances. If so
requested by Indemnitee, the Company shall advance (within ten
business days of such request) any and all Expenses to Indemnitee
(an "Expense Advance"); provided that, if and to the extent that
the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee (who hereby agrees
to reimburse the Company) for all such amounts theretofore paid. If
Indemnitee has commenced or commences legal proceedings in a court
of competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, as provided in Section
4, any determination made by the Reviewing Party that Indemnitee
would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse
the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or have lapsed).
Indemnitee's obligation to reimburse the Company for Expense
Advances shall be unsecured and no interest shall be charged
thereon.
(d) Mandatory Indemnification.
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits in defense
of any Proceeding relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, Indemnitee
shall be indemnified against all Expenses incurred in connection
therewith.
-2-
(e) Partial Indemnification. If
indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of Expenses,
but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
(f) Prohibited Indemnification. No
indemnification pursuant to this Agreement shall be paid by the
Company on account of any Proceeding in which final unappealed
judgment beyond the right of appeal is rendered against Indemnitee
for an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Company pursuant to the provisions
of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provisions of any federal, state, or local
laws.
3. Reviewing Party. Prior to any
Change in Control, the Reviewing Party shall be any appropriate
person or body consisting of a member or members of the Board or
any other person or body appointed by the Board who is not a party
to the particular Proceeding with respect to which Indemnitee is
seeking indemnification; after a Change in Control, the Reviewing
Party shall be the Independent Counsel referred to below. With
respect to all matters arising after a Change in Control (other
than a Change in Control approved by a majority of the directors on
the Board who were directors immediately prior to such Change in
Control) concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or
under applicable law or the Company's Articles of Incorporation or
Bylaws now or hereafter in effect relating to indemnification for
Indemnifiable Events, the Company shall seek legal advice only from
Independent Counsel selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld), and
who has not otherwise performed services for the Company or the
Indemnitee (other than in connection with indemnification matters)
within the last five years. The 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. Such
counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the
Indemnitee should be permitted to be indemnified under applicable
law. The Company agrees to pay the reasonable fees of the
Independent Counsel and to indemnify fully such counsel against any
and all expenses (including attorneys' fees), claims, liabilities,
loss, and damages arising out of or relating to this Agreement or
the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and
Appeal.
(a) Indemnification Payment.
Indemnitee shall be entitled to indemnification of Expenses, and
shall receive payment thereof, from the Company in accordance with
this Agreement as soon as practicable after Indemnitee has made
written demand on the Company for indemnification, unless the
Reviewing Party has given a written opinion to the Company that
Indemnitee is not entitled to indemnification under applicable
law.
(b) Suit to Enforce Rights.
Regardless of any action by the Reviewing Party, if Indemnitee has
not received full indemnification within thirty days after making a
demand in accordance with Section 4(a), Indemnitee shall have the
right to enforce its indemnification rights under this Agreement by
commencing litigation in any court in the State of Nevada having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
determination by the Reviewing Party or any aspect thereof. The
Company hereby consents to service of process and to appear in any
such proceeding. Any determination by the Reviewing Party not
challenged by the Indemnitee shall be binding on the Company and
Indemnitee. The remedy provided for in this Section 4 shall be in
addition to any other remedies available to Indemnitee in law or
equity.
(c) Defense to Indemnification, Burden of
Proof, and Presumptions. It shall be a defense to any action
brought by Indemnitee against the Company to enforce this Agreement
(other than an action brought to enforce a claim for Expenses
incurred in defending a Proceeding in advance of its final
disposition where the required undertaking has been tendered to the
Company) that it is not permissible under applicable law for the
Company to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled
to be indemnified hereunder, the burden of proving such a
defense or determination shall be on the Company. Neither the
failure of the Reviewing Party or the Company (including its Board,
independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action by
Indemnitee that indemnification of the claimant is proper under the
circumstances because he has met the standard of conduct set forth
in applicable law, nor an actual determination by the Reviewing
Party or Company (including its Board, independent legal counsel,
or its shareholders) that the Indemnitee had not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable
standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit, or proceeding, by judgment,
order, settlement (whether with or without court approval),
conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted
by applicable law.
-3-
5. Indemnification for Expenses Incurred
in Enforcing Rights. The Company shall indemnify Indemnitee
against any and all Expenses that are incurred by Indemnitee in
connection with any action brought by Indemnitee for
(i) indemnification of
Expenses by the Company under this Agreement or any other agreement
or under applicable law or the Company's Articles of Incorporation
or Bylaws now or hereafter in effect relating to indemnification
for Indemnifiable Events; and/or
(ii) recovery
under directors' and officers' liability insurance policies
maintained by the Company, but only in the event that Indemnitee
ultimately is determined to be entitled to such indemnification or
insurance recovery, as the case may be. In addition, the Company
shall, if so requested by Indemnitee, advance the foregoing
Expenses to Indemnitee, subject to and in accordance with Section
2(c).
6. Notification and Defense of
Proceeding.
(a) Notice. Promptly after receipt
by Indemnitee of notice of the commencement of any Proceeding,
Indemnitee will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company
will not relieve it from any liability that it may have to
Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any
Proceeding as to which Indemnitee notifies the Company of the
commencement thereof, the Company will be entitled to participate
in the Proceeding at its own expense and except as otherwise
provided below, to the extent the Company so wishes, it may assume
the defense thereof with counsel reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its
election to assume the defense of any Proceeding, the Company will
not be liable to Indemnitee under this Agreement or otherwise for
any Expenses subsequently incurred by Indemnitee in connection with
the defense of such Proceeding other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have
the right to employ his own counsel in such Proceeding, but all
Expenses related thereto incurred after notice from the Company of
its assumption of the defense shall be at Indemnitee's expense
unless: (i) the employment of counsel by Indemnitee has been
authorized by the Company; (ii) Indemnitee has reasonably
determined that there may be a conflict of interest between
Indemnitee and the Company in the defense of the Proceeding, after
a Change in Control (other than a Change in Control approved by a
majority of the directors on the Board who were directors
immediately prior to such Change in Control); (iii) the employment
of counsel by Indemnitee has been approved by the Independent
Counsel; or (iv) the Company shall not in fact have employed
counsel to assume the defense of such Proceeding, in each of which
case all Expenses of the Proceeding shall be borne by the Company.
The Company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the determination provided for in (ii)
above.
(c) Settlement of Claims. The
Company shall not be liable to indemnify Indemnitee under this
Agreement or otherwise for any amounts paid in settlement of any
Proceeding effected without the Company's written consent,
provided, however, that if a Change in Control has occurred (other
than a Change in Control approved by a majority of the directors on
the Board who were directors immediately prior to such Change in
Control), the Company shall be liable for indemnification of
Indemnitee for amounts paid in settlement if the Independent
Counsel has approved the settlement. The Company shall not settle
any Proceeding in any manner that would impose any
penalty or limitation on Indemnitee without Indemnitee's written
consent. Neither the Company nor the Indemnitee will unreasonably
withhold their consent to any proposed settlement. The Company
shall not be liable to indemnify the Indemnitee under this
Agreement with regard to any judicial award if the Company was not
given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action; the Company's liability
hereunder shall not be excused if participation in the Proceeding
by the Company was barred by this Agreement.
-4-
7. Establishment of Trust. In the
event of a Change in Control (other than a Change in Control
approved by a majority of the directors on the Board who were
directors immediately prior to such Change in Control) the Company
shall, upon written request by Indemnitee, create a Trust for the
benefit of the Indemnitee and from time to time upon written
request of Indemnitee shall fund the Trust in an amount sufficient
to satisfy any and all Expenses reasonably anticipated at the time
of each such request to be incurred in connection with
investigating, preparing for, participating in, and/or defending
any Proceeding relating to an Indemnifiable Event. The amount or
amounts to be deposited in the Trust pursuant to the foregoing
funding obligation shall be determined by the Reviewing Party. The
terms of the Trust shall provide that: (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
ten 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 same circumstances for which the
Indemnitee would be required to reimburse the Company under Section
2(c) of this Agreement); (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 the 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 the Indemnitee has
been fully indemnified under the terms of this Agreement. The
Trustee shall be chosen by the Indemnitee. Nothing in this Section
7 shall relieve the Company of any of its obligations under this
Agreement. All income earned on the assets held in the Trust shall
be reported as income by the Company for federal, state, local, and
foreign tax purposes. The Company shall pay all costs of
establishing and maintaining the Trust and shall indemnify the
Trustee against any and all expenses (including attorneys' fees),
claims, liabilities, loss, and damages arising out of or relating
to this Agreement or the establishment and maintenance of the
Trust.
8. Non-Exclusivity. The rights of
Indemnitee hereunder shall be in addition to any other rights
Indemnitee may have under the Company's Articles of Incorporation,
Bylaws, applicable law, or otherwise. To the extent that a change
in applicable law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded
currently under the Company's Articles of Incorporation, Bylaws,
applicable law, or this Agreement, it is the intent of the parties
that Indemnitee enjoy by this Agreement the greater benefits so
afforded by such change.
9. Liability Insurance. To the
extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any Company director or officer.
10. Period of Limitations. No legal
action shall be brought and no cause of action shall be asserted by
or on behalf of the Company or any affiliate of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors, or personal or
legal representatives after the expiration of two (2) years from
the date of accrual of such cause of action, or such longer period
as may be required by state law under the circumstances. Any claim
or cause of action of the Company or its affiliate shall be
extinguished and deemed released unless asserted by the timely
filing of a legal action within such period; provided, however,
that if any shorter period of limitations is otherwise applicable
to any such cause of action the shorter period shall
govern.
11. Amendment of this Agreement. 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
binding unless in the form of a writing signed by the party against
whom enforcement of the waiver is sought, and no such waiver shall
operate as a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver.
Except as specifically provided herein, no failure to exercise or
any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
12. Subrogation. In the event of
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 shall do
everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
-5-
13. No Duplication of Payments. The
Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the
extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise
Indemnifiable hereunder.
14. Binding Effect. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the
business and/or assets of the Company), assigns, spouses, heirs,
and personal and legal representatives. The Company shall require
and cause any successor (whether direct or indirect by purchase,
merger, consolidation, or otherwise) to all, substantially all, or
a substantial part, of the business and/or assets of the Company,
by written agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. The
indemnification provided under this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an
indemnified capacity pertaining to an Indemnifiable Event even
though he may have ceased to serve in such capacity at the time of
any Proceeding.
15. Severability. If any provision
(or portion thereof) of this Agreement shall be held by a court of
competent jurisdiction to be invalid, void, or otherwise
unenforceable, the remaining provisions shall remain enforceable to
the fullest extent permitted by law. Furthermore, to the fullest
extent possible, the provisions of this Agreement (including,
without limitation, each portion of this Agreement containing any
provision held to be invalid, void, or otherwise unenforceable,
that is not itself invalid, void, or unenforceable) shall be
construed so as to give effect to the intent manifested by the
provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of California applicable to contracts made
and to be performed in such State without giving effect to the
principles of conflicts of laws.
17. Notices. All notices, demands,
and other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if
delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and
addressed to the Company at:
000
Xxxxxxxx Xxxxxx
Xxxxx
Xxx Xxxxxxxxx, XX 00000 Attention: CEO
and to
Indemnitee at:
Xxx
Xxxxxxxxxx.
c/o
I3
Strategy Partners, LLC
000 X.
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX
00000
Notice
of change of address shall be effective only when done in
accordance with this Section. All notices complying with this
Section shall be deemed to have been received on the date of
delivery or on the third business day after mailing.
-6-
IN
WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day specified
above.
By:
/S/ Xxxxx X.
Xxxxx
Name:
Xxxxx Xxxxx
Title:
Chief Executive Officer
XXX
XXXXXXXXXX
/S/ Xxx Xxxxxxxxxx
Indemnitee
-7-
