Exhibit 10.18
CYPROS PHARMACEUTICAL CORPORATION
INDEMNITY AGREEMENT
This Agreement is made and entered into as of the ___ day of _________, 199__
by and between Cypros Pharmaceutical Corporation, a California corporation
(the "Corporation"), and ______________________ ("Indemnitee").
RECITALS
WHEREAS, Indeninitee performs a valuable service to the Corporation in his
capacity as __________________ of the Corporation;
WHEREAS, the shareholders of the Corporation have adopted provisions in the
Articles of Incorporation (the "Articles") and the Bylaws (the "Bylaws") of the
Corporation providing for the indemnification of the directors, executive
officers, officers, employees and other agents of the Corporation, including
persons serving at the request of the Corporation in such capacities with other
corporations or enterprises, as authorized by the California Corporations Code,
as amended (the 'Code");
WHEREAS, the Articles, the Bylaws and the Code, by their non-exclusive
nature, permit contracts between the Corporation and its directors, executive
officers, officers, employees and other agents with respect to indemnification
of such persons; and
WHEREAS, in order to induce Indemnitee to continue to serve as ____________
of the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as after the
date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE Corporation. Indemnitee will serve, at the will of
the Corporation or under separate contract, if any such contract exists, as
__________________ of the Corporation or as a director, executive officer,
officer or other fiduciary of an affiliate of the Corporation (including any
employee benefit plan of the Corporation) faithfully and to the best of his
ability so long as he is duly elected and qualified in accordance with the
provisions of the Bylaws or other applicable charter documents of the
Corporation or such affiliate; provided, however, that Indemnitee may at any
time and for any reason resign from such position (subject to any contractual
obligation that Indemnitee may have assumed apart from this Agreement) and that
the Corporation or any affiliate shall have no obligation under this Agreement
to continue Indemnitee in any such position.
2. INDEMNITY. Subject to a determination pursuant to Section 8 hereof,
the Corporation hereby agrees to hold harmless and indemnify Indemnitee:
a. against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in
settlement, and any other amounts that Indemnitee becomes
legally obligated to pay because of any claim or claims made
against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
arbitrational, administrative or investigative (including an
action by or in the right of the Corporation) to which
Indemnitee is, was or at any time (even after termination of
his employment with the Corporation) becomes a party, or is
threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, executive
officer, officer, employee or other agent of the Corporation,
or is or was serving (even prior to the date hereof) or at any
time serves at the request of the Corporation as a director,
executive officer, officer, employee or other agent of another
corporation, partnership,joint venture, trust, employee benefit
plan or other enterprise; and
b. otherwise to the fullest extent not prohibited by the Articles,
the Bylaws or the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. To the extent that any of the
matters set forth in subsections (a) through (k)) of this Section 3 are
successfully established by the Corporation as defenses in accordance with the
provisions of Section 9 hereof, no indemnity pursuant to Section 2 hereof will
be payable by the Corporation:
a. on account of any claim against Indemnitee for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Corporation 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;
b. on account of Indemnitee's conduct from which Indemnitee
derived an improper personal benefit;
c. on account of Indemnitee's conduct that he believed to be
contrary to the best interests of the Corporation or its shareholders or that
involved the absence of good faith on the part of Indemnitee;
d. on account of Indemnitee's conduct that constituted intentional
misconduct or a knowing and culpable violation of law;
e. on account of Indemnitee's conduct that showed a reckless
disregard for the Indemnitee's duty to the Corporation or its shareholders in
circumstances in which Indemnitee was aware, or should have been aware, in the
ordinary course of performing his duties, of a risk of serious injury to the
Corporation or its shareholders;
f. on account of Indemnitee's conduct that constituted an
unexcused pattern of inattention that amounted to an abdication of Indemnitee's
duty to the Corporation or its shareholders;
g. on account of Indemnitee's conduct which constituted a
violation of the Indemnitee's duties under Sections 310 or 316 of the Code;
h. for which payment is actually made to Indemnitee under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment under
such insurance, clause, bylaw or agreement;
i. if indemnification is not lawful (and, in this respect, both
the Corporation and Indemnitee have been advised that the Securities and
Exchange Commission believes 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);
j. in connection with any proceeding (or part thereof) initiated
by Indemnitee, or any proceeding by Indemnitee against the Corporation or its
directors, executive officers, officers, employees or other agents, unless (i)
such indemnification is expressly required to be made by law, (ii)
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the proceeding was authorized by the Board of Directors of the Corporation,
(iii) such indemnification is provided by the Corporation, in its sole
discretion, pursuant to the powers vested in the Corporation under the Code, or
(iv) the proceeding is initiated pursuant to Section 9 hereof;
k. with respect to any action by or in the right of the
Corporation:
i. if the Indemnitee is adjudged to be liable to the
Corporation in performance of the Indemnitee's duty to the Corporation and its
shareholders, unless and only to the extent that the court in which such action
is or was pending shall determine upon application that, in view of all of the
circumstances of the case, the Indemnitee is fairly and reasonably entitled to
indemnity for expenses, and then only to the extent that the court shall
determine;
ii. for expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval; or
iii. for amounts paid in settling or otherwise disposing of a
pending action without court approval; and
l. to the extent, and only to the extent, that indemnification
with respect to such action (i) would be inconsistent with the Articles or
Bylaws, or a resolution of the shareholders or agreement of the Corporation
prohibiting or otherwise limiting such indemnification and in effect at the time
of the accrual of the action or (ii) would be inconsistent with any condition
expressly imposed by a court in approving a settlement, unless Indemnitee, has
been successful on the merits or unless the indemnification has been approved by
the shareholders of the Corporation in accordance with Section 153 of the Code
(with the shares of the Indemnitee not being entitled to vote thereon).
4. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Indemnitee is a
director, executive officer, officer, employee, or other agent of the
corporation (or is serving or had served at the request of the Corporation as a
director, executive officer, officer, employee, or other agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) and shall continue thereafter so long as Indemnitee shall be subject
to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, arbitrational, administrative or
investigative, by reason of the fact that Indemnitee had served in the capacity
referred to herein.
5. PARTIAL INDEMNIFICATION. Indemnitee shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement, and any other amounts that Indemnitee becomes legally
obligated to pay in connection with any action, suit or proceeding referred to
in Section 2 hereof even if not entitled hereunder to indemnification for the
total amount thereof, and the Corporation shall indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee will, if a claim in respect thereof is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof:
a. the Corporation will be entitled to participate therein at its
own expense;
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b. except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the Corporation to
Indemnitee of its election to assume the defense thereof, the Corporation will
not be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof
except for reasonable costs of investigation or otherwise as provided below.
Indemnitee shall have the right to employ separate counsel in such action, suit
or proceeding but the fees and expenses of such counsel incurred after notice
from the Corporation of its assumption of the defense thereof shall be at the
expenses of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Corporation and
Indemnitee in the conduct of the defense of such action, or (iii) the
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which cases the reasonable fees and expenses of
Indemnitee's separate counsel shall be at the expense of the Corporation. The
Corporation shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Corporation or as to which Indemnitee
shall have made the conclusion provided for in clause (ii) above; and
c. the Corporation shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent, which may be
given or withheld in Indemnitee's sole discretion.
7. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Indemnitee in connection with such proceeding upon receipt of an
undertaking by or on behalf of Indemnitee to repay said amounts if it shall be
determined ultimately that Indemnitee is not entitled to be indemnified under
the provisions of this Agreement, the Bylaws, the Articles, the Code or
otherwise. Notwithstanding the foregoing, unless otherwise determined pursuant
to Section 8, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board of Directors by a majority vote of a
quorum consisting of directors who are not parties to the proceeding (or, if no
such quorum exists, by independent legal counsel mutually acceptable to both the
Corporation and Indemnitee in a written opinion) that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in the best interests of the Corporation and its
shareholders.
8. DETERMINATION BY THE CORPORATION. To the extent required by the
Code, promptly after receipt of A request for indemnification hereunder made by
Indemnitee (and in any event within 90 days), the Corporation shall make A
reasonable, good faith determination as to whether indemnification of Indemnitee
is proper under the Code by means of:
a. a majority vote of a quorum consisting of directors who are
not parties to such proceeding;
b. if such quorum is not obtainable, by independent legal counsel
in a written opinion; or
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c. approval or ratification by the affirmative vote of a majority
of the shares of the Corporation represented and voting at a duly held meeting
at which a quorum is present (which shares voting affirmatively also constitute
at least a majority of the required quorum) or by written consent of a majority
of the outstanding shares entitled to vote; where in each case the shares owned
by the person to be indemnified shall not be considered entitled to vote
thereon.
Such determination shall be reasonably made in good faith by the decision making
party based upon the facts known to the decision-making party at the time such
determination is made.
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee
in the forum in which the proceeding is or was pending. or, if such forum is not
available or a determination is made that such forum is not convenient, in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Indemnitee, in such enforcement
action, if successful in whole or in part, shall be entitled to be paid also the
expense of prosecuting his claim. The Corporation shall be entitled to raise by
pleading as an affirmative defense to any action for which a claim for
indemnification is made under Section 2 hereof that Indemnitee is not entitled
to indemnification because of the limitations set forth in Section 3 hereof.
Neither the failure of the Corporation (including its Board of Directors, its
shareholders or independent legal counsel) to have made a determination prior to
the commencement of such enforcement action that indemnification of Indemnitee
is proper in the circumstances, nor an actual determination by the Corporation
(including its Board of Directors, its shareholders or independent legal
counsel) that such indemnification is improper shall be a defense to the action
or create a presumption that Indemnitee is not entitled to indemnification under
this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Indemnitee by
this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquired under any statute, provision of the Articles or
Bylaws, agreement, vote of shareholders or directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office.
12. SURVIVAL OF RIGHTS.
a. The rights conferred on Indemnitee by this Agreement shall
continue after Indemnitee has ceased to be a director, executive officer,
officer, employee or other agent of the Corporation or to serve at the request
of the Corporation as a director, executive officer, officer, employee or other
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise and shall inure to the benefit of Indemnitee's
heirs, executors and administrators.
b. The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
bad taken place.
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13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify
Indemnitee to the fullest extent provided by the Articles, the Bylaws, the Code
or any other applicable law.
14. GOVERNING Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California as applied to contracts
entered into in California, between California residents and to be performed
entirely within California.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
a. if to Indemnitee, at the address indicated below his signature hereunder.
b. if to the Corporation, to
Cypros Pharmaceutical Corporation
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
or to such other address as may have been furnished to Indemnitee by the
Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
"Corporation" CYPROS PHARMACEUTICAL CORPORATION
By_____________________
Its__________________________
"Indemnitee" _____________________________
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