EXHIBIT 10.13
FORM OF DIRECTOR INDEMNITY AGREEMENT
THIS DIRECTOR INDEMNITY AGREEMENT ("AGREEMENT") is made as of March
5, 2003, by and between INTERLEUKIN GENETICS, INC., a Delaware corporation (the
"CORPORATION"), and the undersigned director of the Corporation ("INDEMNITEE").
It is essential to the Corporation to attract and retain as
directors the most capable persons available. The substantial increase in
corporate litigation subjects directors and officers to expensive litigation
risks at the same time that the availability of economical directors' and
officers' liability insurance has been severely limited. In furtherance of the
express policy of the Corporation to indemnify its directors so as to provide
them with the maximum possible protection permitted by law, and in consideration
of Indemnitee's agreement to serve as a director of the Corporation, the parties
are entering into this Agreement.
ACCORDINGLY, the parties agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement:
(a) "CHANGE IN CONTROL" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14a promulgated under the Exchange Act, provided that, without
limitation, such a change in control shall be deemed to have occurred if: (1)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation and any new
director whose election by the Board of Directors or nomination for election by
the Corporation' stockholders 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;
(2) the stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 60% of the total voting power represented by the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation; or (iii) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or substantially all of the
Corporation' assets. Notwithstanding the foregoing, the "Contemplated
Transactions," as defined in the Stock Purchase Agreement, dated as of the date
of this Agreement, between the Corporation and Pyxis Innovations Inc., a
Delaware corporation, shall not constitute of Change of Control for the purposes
of this Agreement.
(b) "EXPENSES" means all costs, expenses and obligations paid or incurred
in connection with investigating, litigating, being a witness in, defending or
participating in, or preparing to litigate, defend, be a witness in or
participate in any matter that is the subject of a Proceeding (as defined
below), including attorneys' and accountants' fees and court costs.
(c) "PROCEEDING" means any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether brought by or in the
right of the Corporation or otherwise and whether of a civil, criminal,
administrative or investigative nature, in which Indemnitee may be or may have
been involved as a party or otherwise by reason of the fact that Indemnitee is
or was a director, officer, employee, agent or fiduciary of the Corporation, or
by reason of any action taken by Indemnitee or any inaction on Indemnitee's part
while acting as a director, officer, employee, agent or fiduciary of the
Corporation, or by reason of the fact that Indemnitee is or was serving at the
request of the Corporation as a director, officer, employee, agent or fiduciary
of another corporation, partnership, joint venture, trust or other enterprise.
The term "Proceeding" also includes a proceeding in which Indemnitee
successfully enforces the terms of this Agreement against the Corporation.
(d) "RESOLUTION COSTS" includes any amount paid in connection with a
Proceeding and in satisfaction of a judgment, fine, penalty or any amount paid
in settlement.
SECTION 2. AGREEMENT TO SERVE. Indemnitee agrees to serve as a director of
the Corporation for so long as Indemnitee is duly elected or until the tender of
Indemnitee's written resignation. If, as of the date of this Agreement,
Indemnitee has not yet been elected/appointed to serve as a director of the
Corporation, then this Agreement shall not become effective until Indemnitee is
elected/appointed as a director.
SECTION 3. INDEMNIFICATION. The indemnification provided under this
Agreement shall be as follows:
(a) The Corporation shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by Indemnitee in connection with any
Proceeding. Additionally, in any Proceeding other than a Proceeding by or in the
right of the Corporation, the Corporation shall indemnify Indemnitee against all
Resolution Costs actually and reasonably incurred by Indemnitee in connection
with the Proceeding. No indemnification shall be made under this subsection:
(i) with respect to remuneration paid to Indemnitee if it is
determined by a final judgment or other final adjudication that the
remuneration was in violation of law or is required by law to be returned
to the Corporation;
(ii) on account of any suit in which judgment is rendered 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 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), or similar provisions of any federal, state or local law;
(iii) on account of Indemnitee's conduct that is determined by a
final judgment or other final adjudication to have been knowingly
fraudulent, deliberately dishonest or willful misconduct;
(iv) on account of Indemnitee's conduct that a final judgment or
other final adjudication is determined to have been in bad faith, in
opposition to best interests of the Corporation or produced an unlawful
personal benefit;
(v) with respect to a criminal proceeding if Indemnitee knew or
reasonably should have known that Indemnitee's conduct was illegal;
(vi) if a final decision by a court having jurisdiction in the
matter determines that indemnification under this Agreement is not lawful;
and
(vii) on account of any suit in which judgment is rendered 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 306(a) of the Xxxxxxxx-Xxxxx Act of 2002.
(b) In addition to any indemnification provided under Subsection 3(a)
above, the Corporation shall indemnify Indemnitee against any Expenses or
Resolution Costs incurred by Indemnitee, regardless of the nature of the
Proceeding in which Expenses and/or Resolution Costs were incurred, if the
Expenses
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or Resolution Costs are or would have been covered under any directors' and
officers' liability insurance policies in effect on the effective date of this
Agreement or that become effective on any later date.
(c) In addition to any indemnification provided under Subsections 3(a) and
3(b) above, the Corporation shall provide Indemnitee, to the fullest extent
allowed by law as now or later enacted or interpreted, with indemnification
against any Expenses and/or Resolution Costs incurred by Indemnitee in
connection with any Proceeding. To the extent a change in the laws governing
this Agreement (whether by statute or judicial decision) permits greater
indemnification, either by agreement or otherwise, than presently provided by
law or this Agreement, it is the intent of the parties that Indemnitee shall
enjoy by this Agreement the greater benefits afforded by the change.
(d) Without limiting Indemnitee's right to indemnification under any other
provision of this Agreement, the Corporation shall indemnify Indemnitee in
accordance with the provisions of this subsection if Indemnitee is a party to or
threatened to be made a party to or otherwise involved in any Proceeding by or
in the right of the Corporation to procure a judgment in its favor by reason of
the fact that Indemnitee was or is a director and/or officer of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against all Expenses actually and reasonably incurred by
Indemnitee and any amounts paid by Indemnitee in settlement of the Proceeding,
but only if Indemnitee acted in good faith in a manner that Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made under this subsection
in respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Corporation in the performance of his duty to the
Corporation, unless and only to the extent that any court in which the
Proceeding was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity, in which event
indemnification shall be limited to expenses actually and reasonably incurred.
(e) Notwithstanding anything in this Agreement to the contrary, prior to a
Change in Control, Indemnitee shall not be entitled to indemnification pursuant
to this Agreement in connection with any Proceeding initiated by Indemnitee
against the Corporation or any director, officer, employee, agent or fiduciary
of the Corporation (in such capacity) unless the Corporation has joined in or
consented to the initiation of the Proceeding or such Proceeding relates to the
enforcement by Indemnity of Indemnitee's rights under this Agreement.
SECTION 4. PAYMENT OF INDEMNIFICATION.
(a) Expenses incurred by Indemnitee and subject to indemnification under
Section 3 above shall be paid directly by the Corporation or reimbursed to
Indemnitee within ten days after the receipt of a written request of Indemnitee
providing that Indemnitee undertakes to repay any amount paid or advanced under
this Section if and to the extent that it is ultimately determined that
Indemnitee is not entitled to indemnification under Section 3.
(b) Except as otherwise provided in Section 4(a) above, any
indemnification under Section 3 above shall be made no later than 30 days after
receipt by the Corporation of the written request of Indemnitee, unless within
that 30-day period the Board of Directors, by a majority vote of a quorum
consisting of directors who are not parties to the Proceeding, determines that
Indemnitee is not entitled to the indemnification set forth in Section 3 or
unless the Board of Directors refers Indemnitee's indemnification request to
independent legal counsel. In cases where there are no directors who are not
parties to the Proceeding, the indemnification request shall be referred to
independent legal counsel. If the indemnification request is referred to
independent legal counsel, then Indemnitee shall be paid no later than 45 days
after Indemnitee's initial request to the Corporation unless within that time
independent legal
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counsel presents to the Board of Directors a written opinion that
indemnification is not allowed under Section 3 of this Agreement. If a Change in
Control occurs and results in individuals who were directors prior to the
circumstances giving rise to the Change in Control ceasing for any reason to
constitute a majority of the Board of Directors, the above determination, if
any, shall be made by independent legal counsel and not the Board of Directors.
The Corporation agrees to pay the reasonable fees of the independent legal
counsel and to fully indemnify that counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant to this Agreement. If
there has not been a Change in Control, independent legal counsel shall be
selected by the Board or Directors or the executive committee of the board, and
if there has been a Change in Control, the independent legal counsel shall be
selected by Indemnitee. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The person,
persons or entity making the determination with respect to Indemnitee's
entitlement to indemnification shall notify Indemnitee of such determination no
later than two (2) business days after the determination is made.
(c) The right to indemnification payments as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification is not permitted by this Agreement or by
law shall be on the Corporation or on the person challenging the
indemnification. Neither the failure of the Corporation, including its Board of
Directors, to have made a determination prior to the commencement of any
Proceeding that indemnification is proper, nor an actual determination by the
Corporation, including its Board of Directors or independent legal counsel, that
indemnification is not proper, shall bar an action by Indemnitee to enforce this
Agreement or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement. If the Board of Directors or independent
legal counsel determines in accordance with Section 4(b) that Indemnitee would
not be permitted to be indemnified in whole or in part, Indemnitee shall have
the right to commence litigation in any court in the State of Delaware having
subject matter jurisdiction and in which venue is proper seeking an independent
determination by the court or challenging the determination by the Board of
Directors or independent legal counsel, and the Corporation hereby consents to
service of process and to appear in that Proceeding. Expenses incurred by
Indemnitee in connection with successfully establishing Indemnitee's right to
indemnification, in whole or in part, shall also be reimbursed by the
Corporation.
SECTION 5. DEFENSE OF CLAIM. Prior to a Change in Control:
(a) The Corporation, jointly with any other indemnifying party, shall be
entitled to assume the defense of any Proceeding as to which Indemnitee requests
indemnification. After notice from the Corporation to Indemnitee of its election
to assume the defense of a Proceeding, the Corporation shall not be liable to
Indemnitee under this Agreement for any legal or other Expenses subsequently
incurred by Indemnitee in connection with the defense of such matter other than
reasonable costs of investigation or as otherwise provided in subsection (c)
below.
(b) Except as provided in Section 5(c), the Corporation need not, in any
action or actions, employ or approve the employment of more than one counsel to
represent Indemnitee and any other
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officer or other party entitled to indemnification pursuant to an agreement
similar to this Agreement or otherwise.
(c) Indemnitee may employ his own counsel in a Proceeding and be
indemnified therefor if (i) the Corporation approves, in writing, the employment
of such counsel, or (ii) either (A) Indemnitee has reasonably concluded that
there are conflicts of interest between the Corporation and Indemnitee or
between Indemnitee and other parties represented by counsel employed by the
Corporation to represent Indemnitee in the Proceeding, or (B) the Corporation
has not employed counsel to assume the defense of the Proceeding.
SECTION 6. PARTIAL INDEMNIFICATION; SUCCESSFUL DEFENSE. If Indemnitee is
entitled under any provision of this Agreement to indemnification by the
Corporation for some or a portion of the Expenses or Resolution Costs actually
and reasonably incurred by Indemnitee but not, however, for the total amount,
the Corporation shall nevertheless indemnify Indemnitee for the portion of the
Expenses or Resolution Costs to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any or
all claims relating in whole or in part to a Proceeding or in defense of any
issue or matter in a Proceeding, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection with
that Proceeding.
SECTION 7. CONSENT. Unless and until a Change in Control has occurred, the
Corporation shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding made without the Corporation's
written consent. The Corporation shall not settle any Proceeding in any manner
that would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Corporation nor Indemnitee shall unreasonably
withhold their consent to any proposed settlement.
SECTION 8. SEVERABILITY. If this Agreement or any portion of this
Agreement (including any provision within a single section, subsection or
sentence) shall be held to be invalid, void or otherwise unenforceable on any
ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee as to any Expenses or Resolution Costs with
respect to any Proceeding to the full extent permitted by law or any applicable
portion of this Agreement that shall not have been invalidated, declared void or
otherwise held to be unenforceable.
SECTION 9. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification
provided by this Agreement shall be in addition to any other rights that
Indemnitee may be entitled to under the Certificate of Incorporation, the
Bylaws, any agreement or any vote of stockholders or disinterested directors of
the Corporation; the Delaware General Corporation Law; or otherwise, both as to
actions in Indemnitee's official capacity and as to actions in another capacity
while holding office.
SECTION 10. NO PRESUMPTION. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or 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.
SECTION 11. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of the payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do everything that may be necessary to secure those rights, including the
execution of all documents necessary to enable the Corporation to effectively
bring suit to enforce those rights.
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SECTION 12. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Agreement to make any payment to the extent Indemnitee has
otherwise actually received payment (under any insurance policy, Bylaw or
otherwise) of the amounts otherwise indemnifiable under this Agreement.
SECTION 13. NOTICE. Indemnitee shall, as a condition precedent to his
right to be indemnified under this Agreement, give to the Corporation notice in
writing as soon as practicable of any claim for which indemnity will or could be
sought under this Agreement. Notice to the Corporation shall be directed to
Interleukin Genetics, Inc., 000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000 Attention:
Chief Executive Officer (or to any other individual or address that the
Corporation designates in writing to Indemnitee). Notice shall be deemed
received three days after the date postmarked if sent by prepaid mail properly
addressed. In addition, Indemnitee shall give the Corporation any information
and cooperation that it may reasonably require and is within Indemnitee's power
to give.
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, and all of which taken
together shall constitute a single document.
SECTION 15. CONTINUATION OF INDEMNIFICATION. The indemnification rights
provided to Indemnitee under this Agreement, including the right provided under
Subsection 4(a) above, shall continue after Indemnitee has ceased to be a
director, officer, employee, agent or fiduciary of the Corporation or any other
corporation, partnership, joint venture, trust or other enterprise that
Indemnitee served in any of those capacities at the request of the Corporation.
SECTION 16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Corporation and Indemnitee and their respective
successors and assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Corporation, spouses, heirs, and personal and legal
representatives.
SECTION 17. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in that State without giving effects to the
principles of conflicts of laws.
SECTION 18. LIABILITY INSURANCE. To the extent the Corporation maintains
an insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee, whether or not then serving as a director and/or officer
of the Corporation, shall be covered by the policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
officer, employee, agent or fiduciary of the Corporation.
SECTION 19. PERIOD OF LIMITATIONS. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Corporation or any
affiliate of the Corporation against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Corporation or its affiliate shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such two
year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall
govern.
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SECTION 20. AMENDMENTS; WAIVER. No supplement, modification, amendment, or
waiver of this Agreement or any of its terms shall be binding unless executed in
writing by all of the parties to this Agreement or, in the case of waiver, by
the party against whom the waiver is asserted. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions of this Agreement (whether or not similar) nor shall any waiver
constitute a continuing waiver.
SECTION 21. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the Corporation and Indemnitee in respect of the
subject matter hereof and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof, including any previous
indemnity agreements between the Corporation and Indemnitee.
* * *
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The parties have executed this Director Indemnity Agreement as of
the date stated in the first paragraph of this Agreement.
INTERLEUKIN GENETICS, INC.
By
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Its
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INDEMNITEE
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SCHEDULE TO FORM OF DIRECTOR INDEMNITY AGREEMENT
Pursuant to Instruction 2 of Item 601 of Regulation S-K, we state that the Form
of Director Indemnity Agreement filed as Exhibit 10.13 to our Current Report on
Form 8-K dated March 5, 2003, is identical in all material respects with
Director Indemnity Agreements we entered with our Directors and Director
appointees, other than with respect only to the Director parties to each
agreement, which are as follows:
Parties to Director Indemnity Agreements
Xxxxxx X. Xxxxx, Xx.
Xxxxxx Xxxxxxx
Xxxx Xxxxxxxx
Xxxx X. Xxxxxxx
Xxxxxx Xxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxx
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx, Xx.
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We hereby undertake to file copies of any or all of such Director Indemnity
Agreements pursuant to an amendment to our Current Report on Form 8-K date
March 5, 2003 upon the request of the Commission.
