EXHIBIT 10.1
FORM OF INDEMNITY AGREEMENT
This Indemnity Agreement (this "AGREEMENT"), dated as of , 2005,
is made by and between Electro-Optical Sciences, Inc., a Delaware corporation
(the "COMPANY"), and [ ], a director and/or officer of the Company (the
"INDEMNITEE").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and because the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;
B. Based on their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
C. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized (the "LAW") empowers the Company to indemnify by
agreement its officers, directors, employees and agents, and persons who serve,
at the request of the Company, as directors, officers, employees or agents of
other corporations or enterprises, and expressly provides that the
indemnification provided by the Law is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS.
1.1 AGENT. For the purposes of this Agreement, "AGENT" of the
Company means any person who is or was a director or officer of the
Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interest of the
Company or a subsidiary of the Company as a director or officer of another
foreign or domestic corporation, partnership, joint venture, trust or
other enterprise or an affiliate of the Company; or was a director or
officer of a foreign or domestic corporation which was a predecessor
corporation of the Company, or was a director or officer of another
enterprise or affiliate of the Company at the request of, for
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the convenience of, or to represent the interests of such predecessor
corporation. The term "ENTERPRISE" includes any employee benefit plan of
the Company, its subsidiaries, affiliates and predecessor corporations.
1.2 EXPENSES. For purposes of this Agreement, "EXPENSES" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements and
other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification or
advancement of expenses under this Agreement.
1.3 PROCEEDING. For the purposes of this Agreement, "PROCEEDING"
means any threatened, pending or completed action, suit or other
proceeding, whether civil, criminal, administrative, investigative or any
other type whatsoever.
1.4 SUBSIDIARY. For purposes of this Agreement, "SUBSIDIARY" means
any corporation of which more than fifty percent (50%) of the outstanding
voting securities is owned directly or indirectly by the Company, by the
Company and one or more of its subsidiaries or by one or more of the
Company's subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue
to serve as an agent of the Company, at the will of the Company (or under
separate agreement, if such agreement exists), in the capacity the Indemnitee
currently serves as an agent of the Company, faithfully and to the best of his
ability, so long as he or she is duly appointed or elected and qualified in
accordance with the applicable provisions of the charter documents of the
Company or any subsidiary of the Company; provided, however, that the Indemnitee
may at any time and for any reason resign from such position (subject to any
contractual obligation that the Indemnitee may have assumed apart from this
Agreement), and the Company or any subsidiary shall have no obligation under
this Agreement to continue the Indemnitee in any such position.
3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the
extent that the Board determines it to be economically reasonable, maintain a
policy of directors' and officers' liability insurance ("D&O INSURANCE"), on
such terms and conditions as may be approved by the Board.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee:
4.1 THIRD PARTY ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any proceeding (other
than an action by or in the right of the Company) by reason of the fact
that he is or was an agent of the Company, or by reason of anything done
or not done by him in any such capacity, against any and all expenses and
liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he
acted in good faith and in a manner he 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 his
conduct was unlawful; and
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4.2 DERIVATIVE ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any proceeding by or in
the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was an agent of the Company, or by reason of
anything done or not done by him in any such capacity, against any amounts
paid in settlement of any such proceeding and all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement or appeal of such proceeding if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the Company; except that no indemnification under this
subsection shall be made in respect of any claim, issue or matter as to
which such person shall have been finally adjudged to be liable to the
Company by a court of competent jurisdiction due to willful misconduct of
a culpable nature in the performance of his duty to the Company, unless
and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
amounts which the Court of Chancery or such other court shall deem proper.
4.3 EXCEPTION FOR AMOUNTS COVERED BY INSURANCE. Notwithstanding
the foregoing, the Company shall not be obligated to indemnify the
Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) to the extent such have been paid directly to
the Indemnitee by D&O Insurance.
5. PARTIAL INDEMNIFICATION AND CONTRIBUTION.
5.1 PARTIAL INDEMNIFICATION. If the Indemnitee is
entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of any expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) incurred by him or her
in the investigation, defense, settlement or appeal of a proceeding but is
not entitled, however, to indemnification for all of the total amount
thereof, then the Company shall nevertheless indemnify the Indemnitee for
such total amount except as to the portion thereof to which the Indemnitee
is not entitled to indemnification.
5.2 CONTRIBUTION. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the
statutory limitations set forth in the Law, then in respect of any
threatened, pending or completed proceeding in which the Company is
jointly liable with the Indemnitee (or would be if joined in such
proceeding), the Company shall contribute to the amount of expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the
relative benefits received by the Company on the one hand and the
Indemnitee on the other hand from the transaction from which such
proceeding arose and (ii) the relative fault of the Company on the one
hand and of the Indemnitee on the other hand in connection with the events
which resulted in such expenses, judgments, fines or settlement amounts,
as well as any other relevant equitable considerations. The relative fault
of the Company on the one hand and of the Indemnitee on the other hand
shall be determined by reference to, among other things, the parties'
relative intent, knowledge,
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access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section 5.2 were determined by pro rata
allocation or any other method of allocation that does not take account of
the foregoing equitable considerations.
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 ADVANCEMENT. Subject to Section 9.1 below and except as
prohibited by law, the Company shall advance all expenses incurred by the
Indemnitee in connection with the investigation, defense, settlement or
appeal of any proceeding to which the Indemnitee is a party or is
threatened to be made a party by reason of the fact that the Indemnitee is
or was an agent of the Company or by reason of anything done or not done
by him in any such capacity. The Indemnitee hereby undertakes to promptly
repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the Law or
otherwise. The advances to be made hereunder shall be paid by the Company
to the Indemnitee within thirty (30) days following delivery of a written
request therefor by the Indemnitee to the Company.
6.2 EXCEPTION. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not be obligated to advance any expenses to
the Indemnitee arising from a lawsuit filed directly by the Company
against the Indemnitee if an absolute majority of the members of the Board
reasonably determines in good faith, within thirty (30) days of the
Indemnitee's request to be advanced expenses, that the facts known to them
at the time such determination is made demonstrate clearly and
convincingly that the Indemnitee acted in bad faith. If such a
determination is made, the Indemnitee may have such decision reviewed by
another forum, in the manner set forth in Sections 8.3, 8.4 and 8.5
hereof, with all references therein to "indemnification" being deemed to
refer to "advancement of expenses," and the burden of proof shall be on
the Company to demonstrate clearly and convincingly that, based on the
facts known at the time, the Indemnitee acted in bad faith.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement,
notify the Company of the commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the commencement
of a proceeding pursuant to Section 7.1 hereof, the Company has D&O
Insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of
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the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding,
with counsel approved by the Indemnitee (which approval shall not be
unreasonably withheld), upon the delivery to the Indemnitee of written
notice of its election to do so. After delivery of such notice, approval
of such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this
Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same proceeding, provided that: (a) the Indemnitee
shall have the right to employ his or her own counsel in any such
proceeding at the Indemnitee's expense and (b) if (i) the employment of
counsel by the Indemnitee has been previously authorized by the Company,
(ii) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct
of any such defense or (iii) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the fees and
expenses of the Indemnitee's counsel shall be at the expense of the
Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in Section
4.1 or 4.2 of this Agreement or in the defense of any claim, issue or
matter described therein, the Company shall indemnify the Indemnitee
against expenses actually and reasonably incurred by him or her in
connection with the investigation, defense or appeal of such proceeding,
or such claim, issue or matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or does not
apply to the entire proceeding, the Company shall nonetheless indemnify
the Indemnitee unless the Company shall prove by clear and convincing
evidence the Indemnitee has not met the applicable standard of conduct
required to entitle the Indemnitee to such indemnification.
8.3 Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding
under this Section 8 involving the Indemnitee and against all expenses
incurred by the Indemnitee in connection with any other proceeding between
the Company and the Indemnitee involving the interpretation or enforcement
of the rights of the Indemnitee under this Agreement unless a court of
competent jurisdiction finds that each of the material claims and/or
defenses of the Indemnitee in any such proceeding was frivolous or not
made in good faith.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to the Indemnitee with respect to proceedings or claims initiated
or brought voluntarily by the
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Indemnitee and not by way of defense, except with respect to proceedings
specifically authorized by the Board or brought to establish or enforce a
right to indemnification and/or advancement of expenses arising under this
Agreement, the charter documents of the Company or any subsidiary or any
statute or law or otherwise, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board
finds it to be appropriate; or
9.2 UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee
hereunder for any amounts paid in settlement of a proceeding unless the
Company consents in advance in writing to such settlement, which
consent shall not be unreasonably withheld; or
9.3 SECURITIES LAW ACTIONS. To indemnify the Indemnitee on account
of any suit in which judgment is rendered against the Indemnitee for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of
the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law; or
9.4 UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee if a
final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful. In this respect, the
Company and the Indemnitee have been advised that the Securities and
Exchange Commission takes the position that indemnification for
liabilities arising under the federal securities laws is against public
policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for
adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or Bylaws, the vote of the
Company's stockholders or disinterested directors, other agreements or
otherwise, both as to action in the Indemnitee's official capacity and to action
in another capacity while occupying his position as an agent of the Company, and
the Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
11. GENERAL PROVISIONS.
11.1 INTERPRETATION OF AGREEMENT. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as
to provide indemnification and advancement of expenses to the Indemnitee
to the fullest extent now or hereafter permitted by law, except as
expressly limited herein.
11.2 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever, then: (a) the validity, legality and enforceability of
the remaining provisions of this Agreement (including, without limitation,
all portions of any paragraphs of this Agreement containing any such
provision held to be invalid, illegal or unenforceable that are not
themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without
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limitation, all portions of any paragraphs of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are
not themselves invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable and to give effect to Section 11.1 hereof.
11.3 MODIFICATION AND WAIVER. 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 deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver.
11.4 SUBROGATION. In the event of full payment under this
Agreement, the Company shall be subrogated to the extent of such payment
to all of the rights of recovery of the Indemnitee, who shall execute all
documents required and shall do all acts that may be necessary or
desirable to secure such rights and to enable the Company effectively to
bring suit to enforce such rights.
11.5 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, which shall together constitute one agreement.
11.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
11.7 NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed duly given: (a) if delivered by hand and signed for by the party
addressee; or (b) if mailed by certified or registered mail, with postage
prepaid, on the third business day after the mailing date. Addresses for
notice to either party are as shown on the signature page of this
Agreement or as subsequently modified by written notice.
11.8 GOVERNING LAW. This Agreement shall be governed exclusively
by and construed according to the laws of the State of Delaware, without
giving effect to that body of laws pertaining to conflict of laws.
11.9 CONSENT TO JURISDICTION. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State
of Delaware for all purposes in connection with any action or proceeding
that arises out of or relates to this Agreement.
11.10 ATTORNEYS' FEES. In the event Indemnitee is required to
bring any action to enforce rights under this Agreement (including,
without limitation, the expenses of any Proceeding described in Section
1.3) the Indemnitee shall be entitled to all reasonable fees and expenses
in bringing and pursuing such action, unless a court of competent
jurisdiction finds each of the material claims of the Indemnitee in any
such action was frivolous and not made in good faith.
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IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnity Agreement effective as of the date first written above.
ELECTRO-OPTICAL SCIENCES, INC.
By:
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Name:
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Title:
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SIGNATURE PAGE TO INDEMNITY AGREEMENT
