INDEMNIFICATION AGREEMENT
Exhibit 10.1
THIS
INDEMNIFICATION AGREEMENT (this “Agreement”) is made
and entered into as of April 21, 2009 by and [between][among] Pharmos
Corporation , a Nevada corporation (the “Company”), [and]
[________] (the “Indemnitee”)[, and
[________], an investment fund affiliated with the Indemnitee (the “Indemnified
Fund”)].
WHEREAS,
highly competent persons have become more reluctant to serve corporations as
directors, officers or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the corporation;
WHEREAS,
the Board of Directors of the Company (the “Board”) has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance
has been a customary and widespread practice among United States-based
corporations and other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be available to it in
the future only at higher premiums and with more exclusions. At the
same time, directors, officers, and other persons in service to corporations or
business enterprises are being increasingly subjected to expensive and
time-consuming litigation relating to, among other things, matters that
traditionally would have been brought only against the Company or business
enterprise itself. The articles of incorporation and the bylaws of
the Company require indemnification of the officers and directors of the
Company. The Indemnitee may also be entitled to indemnification
pursuant to the General Corporation Law of the State of Nevada (“NGCL”). The
articles of incorporation and the NGCL expressly provide that the
indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and members
of the board of directors, officers and other persons with respect to
indemnification;
WHEREAS,
the uncertainties relating to such insurance and to indemnification have
increased the difficulty of attracting and retaining such persons;
WHEREAS,
the Board has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the Company's
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;
WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of, such persons
[and certain affiliates of such persons ]to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified;
WHEREAS,
this Agreement is a supplement to and in furtherance of the articles of
incorporation and the bylaws of the Company and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of the Indemnitee thereunder; and
WHEREAS,
the Indemnitee does not regard the protection available under the Company's
articles of incorporation, bylaws and insurance as adequate in the present
circumstances, and may not be willing to serve as a director without adequate
protection, and the Company desires the Indemnitee to serve in such
capacity. The Indemnitee is willing to serve, continue to serve and
to take on additional service for or on behalf of the Company on the condition
that [(i) ]he be so indemnified[ and (ii) the Indemnified Fund and certain of
its affiliates also be so indemnified].
NOW,
THEREFORE, in consideration of the Indemnitee’s agreement to serve as a director
after the date hereof, the parties hereto agree as follows:
1. Indemnity of
Indemnitee. The Company hereby agrees to hold harmless and
indemnify the Indemnitee to the fullest extent permitted by law, as such may be
amended from time to time. In furtherance of the foregoing
indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than
Proceedings by or in the Right of the Company. The Indemnitee
shall be entitled to the rights of indemnification provided in this Section l(a) if, by
reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or
is threatened to be made, a party to or participant in any Proceeding (as
hereinafter defined) other than a Proceeding by or in the right of the
Company. Pursuant to this Section 1(a), the
Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him, or on his behalf, in connection with such Proceeding
or any claim, issue or matter therein, if the Indemnitee acted in good faith and
in a manner the Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company, and with respect to any criminal Proceeding, had
no reasonable cause to believe the Indemnitee’s conduct was
unlawful.
(b) Proceedings by or in the
Right of the Company. The Indemnitee shall be entitled to the
rights of indemnification provided in this Section 1(b) if, by
reason of his Corporate Status, the Indemnitee is, or is threatened to be made,
a party to or participant in any Proceeding brought by or in the right of the
Company. Pursuant to this Section 1(b), the
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with
such Proceeding if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company; provided, however, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which the Indemnitee shall have been
adjudged to be liable to the Company with respect to the matter claimed for
indemnification unless and to the extent that the appropriate
courts of the State of Nevada shall determine that such
indemnification may be made.
(c) Indemnification for Expenses
of a Party Who is Successful on the Merits or
Otherwise. Notwithstanding any other provision of this
Agreement, to the extent that the Indemnitee is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the maximum extent permitted by law, as
such may be amended from time to time, against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith. If the Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more
but
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less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
the Indemnitee against all Expenses actually and reasonably incurred by him or
on his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 1(c) and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
2. Additional
Indemnity. In addition to, and without regard to any
limitations on, the indemnification provided for in Section 1 of this
Agreement, the Company shall and hereby does indemnify and hold harmless the
Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf if, by
reason of his Corporate Status, he is, or is threatened to be made, a party to
or participant in any Proceeding (including, without limitation, a Proceeding by
or in the right of the Company), including, without limitation, all liability
arising out of the negligence or active or passive wrongdoing of the
Indemnitee. The only limitation that shall exist upon the Company’s
obligations pursuant to this Agreement shall be that the Company shall not be
obligated to make any payment to the Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement)
to be unlawful.
3. Contribution.
(a) Whether
or not the indemnification provided in Sections 1 and 2 of this Agreement
is available, in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with the Indemnitee (or would
be if joined in such action, suit or proceeding), the Company shall pay, in the
first instance, the entire amount of any judgment or settlement of such action,
suit or proceeding without requiring the Indemnitee to contribute to such
payment and the Company hereby waives and relinquishes any right of contribution
it may have against the Indemnitee. The Company shall not enter into
any settlement of any action, suit or proceeding in which the Company is jointly
liable with the Indemnitee (or would be if joined in such action, suit or
proceeding) unless such settlement provides for a full and final release of all
claims asserted against the Indemnitee.
(b) Without
diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, the Indemnitee shall elect or be
required to pay all or any portion of any judgment or settlement in any
threatened, pending or completed action, suit or proceeding in which the Company
is jointly liable with the Indemnitee (or would be if joined in such action,
suit or proceeding), the Company shall contribute to the amount of expenses
(including, without limitation, attorneys’ fees and disbursements), judgments,
fines and amounts paid in settlement actually and reasonably incurred and paid
or payable by the Indemnitee in proportion to the relative benefits received by
the Company and all officers, directors or employees of the Company, other than
the Indemnitee, who are jointly liable with the Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and the Indemnitee,
on the other hand, from the transaction from which such action, suit or
proceeding arose; provided, however, that the proportion determined on the basis
of relative benefit may, to the extent necessary to conform to law, be further
adjusted by reference to the relative fault of the Company and all officers,
directors or employees of the Company other than the Indemnitee who are jointly
liable with the Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and the Indemnitee, on the other hand, in
connection with
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the
events that resulted in such expenses, judgments, fines or settlement amounts,
as well as any other equitable considerations which the Law may require to be
considered. The relative fault of the Company and all officers,
directors or employees of the Company, other than the Indemnitee, who are
jointly liable with the Indemnitee (or would be if joined in such action, suit
or proceeding), on the one hand, and the Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary and the degree to which
their conduct is active or passive.
(c) The
Company hereby agrees to fully indemnify and hold the Indemnitee harmless from
any claims of contribution which may be brought by officers, directors or
employees of the Company, other than the Indemnitee, who may be jointly liable
with the Indemnitee.
(d) To
the fullest extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to the Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying the Indemnitee, shall
contribute to the amount incurred by the Indemnitee, whether for judgments,
fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or
for Expenses, in connection with any claim relating to an indemnifiable event
under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and the Indemnitee as a result of the
event(s) and/or transaction(s) giving cause to such Proceeding and/or (ii) the
relative fault of the Company (and its directors, officers, employees and
agents) and the Indemnitee in connection with such event(s) and/or
transaction(s).
4. Indemnification for Expenses
of a Witness or in Response to a Subpoena. Notwithstanding any
other provision of this Agreement, to the extent that (i) the Indemnitee, by
reason of his Corporate Status, is a witness, or receives a subpoena, in any
Proceeding to which the Indemnitee is not a party, the Indemnitee shall be
indemnified against all Expenses paid or incurred by the Indemnitee in
connection therewith and in the manner set forth in this Agreement, and (ii) any
Indemnified Fund Party (as hereinafter defined), by reason of the Indemnitee’s
Corporate Status or any Indemnified Fund Party’s Corporate Status, is a witness,
or receives a subpoena, in any proceeding to which such Indemnified Fund Party
is not a party, the Indemnified Fund Party shall be indemnified against all
Expenses paid or incurred by it in connection therewith and in the manner set
forth in this Agreement.
5. Advancement of
Expenses. Notwithstanding any other provision of this
Agreement, the Company shall advance all Expenses incurred by or on behalf of
the Indemnitee in connection with any Proceeding by reason of his Corporate
Status within thirty (30) days after the receipt by the Company of a statement
or statements from the Indemnitee requesting such advance or advances from time
to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence
the Expenses incurred by the Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of the Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that the Indemnitee is
not entitled to be indemnified against such Expenses. Any advances
and undertakings to repay pursuant to this Section 5 shall be
unsecured and interest free and made without regard to the Indemnitee’s ability
to repay such advances.
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6. Procedures and Presumptions
for Determination of Entitlement to Indemnification. It is the
intent of this Agreement to secure for the Indemnitee rights of indemnity that
are as favorable as may be permitted under the NGCL and public policy of the
State of Nevada. Accordingly, the parties agree that the following
procedures and presumptions shall apply in the event of any question as to
whether the Indemnitee is entitled to indemnification under this
Agreement:
(a) To
obtain indemnification under this Agreement, the Indemnitee shall submit to the
Company a written request, including therein or therewith such documentation and
information as is reasonably available to the Indemnitee and is reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
the Indemnitee has requested indemnification.
(b) Upon
written request by the Indemnitee for indemnification pursuant to the first
sentence of Section
6(a) of this Agreement, a determination, if required by applicable law,
with respect to the Indemnitee’s entitlement thereto shall be made in the
specific case by one of the following four methods, which shall be at the
election of the board: (i) by a majority vote of the Disinterested Directors (as
hereinafter defined), even though less than a quorum; (ii) by a majority vote of
a committee of Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum; (iii) if there are no
Disinterested Directors or if the Disinterested Directors so direct, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board,
a copy of which shall be delivered to the Indemnitee; or (iv) if so directed by
the Board, by the stockholders of the Company.
(c) If
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 6(b) of this
Agreement, the Independent Counsel shall be selected as provided in this Section
6(c). The Independent Counsel shall be selected by the
Board. The Indemnitee may, within ten (10) days after such written
notice of selection shall have been given, deliver to the Company, as the case
may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of “Independent Counsel” as defined in
this Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel. If a reasonable
written objection is made, the Independent Counsel selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within twenty
(20) days after submission by the Indemnitee of a written request for
indemnification pursuant to Section 6(a) of this
Agreement, no Independent Counsel shall have been selected and not objected to,
either the Company or the Indemnitee may petition the appropriate courts of the
State of Nevada or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Indemnitee to the Company’s
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
shall designate, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under Section 6(b) of this
Agreement. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 6(b) of this
Agreement, and the Company shall pay all reasonable fees and expenses incident
to the procedures of this
5
Section 6(c),
regardless of the manner in which such Independent Counsel was selected or
appointed.
(d) In
making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that the
Indemnitee is entitled to indemnification under this
Agreement. Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing
evidence. Neither the failure of the Company (including by its
directors or Independent Counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is
proper in the circumstances because the Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by
its directors or Independent Counsel) that the Indemnitee has 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.
(e) The
Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s
action is based on: (i) the records or books of account of the Enterprise (as
hereinafter defined) (including, without limitation, financial statements); (ii)
information supplied to the Indemnitee by the officers of the Enterprise in the
course of their duties; (iii) the advice of legal counsel for the Enterprise; or
(iv) information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. In addition, the
knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Enterprise shall not be imputed to the Indemnitee for purposes
of determining the right to indemnification under this
Agreement. Whether or not the foregoing provisions of this Section 6(e) are
satisfied, it shall in any event be presumed that the Indemnitee has at all
times acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Anyone seeking to
overcome this presumption shall have the burden of proof and the burden of
persuasion by clear and convincing evidence.
(f) If
the person, persons or entity empowered or selected under this Section 6 to
determine whether the Indemnitee is entitled to indemnification shall not have
made a determination within sixty (60) days after receipt by the Company of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be entitled to such
indemnification absent (i) a misstatement by the Indemnitee of a material fact,
or an omission of a material fact necessary to make the Indemnitee’s statement
not materially misleading, in connection with the request for indemnification or
(ii) a prohibition of such indemnification under applicable law; provided,
however, that such 60-day period may be extended for a reasonable time, not to
exceed an additional thirty (30) days, if the person, persons or entity making
such determination with respect to entitlement to indemnification in good faith
requires such additional time to obtain or evaluate documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 6(f) shall
not apply if the determination of entitlement to indemnification is to be made
by the stockholders pursuant to item (iv) of Section 6(b) of this
Agreement and if (A) within fifteen (15) days after receipt by the Company of
the request for such determination, the Board or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy-five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the
6
purpose
of making such determination, such meeting is held for such purpose within sixty
(60) days after having been so called and such determination is made
thereat.
(g) The
Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to the 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 the Indemnitee
and reasonably necessary to such determination. Any Independent
Counsel, member of the Board or stockholder of the Company shall act reasonably
and in good faith in making a determination regarding the Indemnitee’s
entitlement to indemnification under this Agreement. Any costs or
expenses (including, without limitation, attorneys’ fees and disbursements)
incurred by the 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 the Indemnitee’s entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold the Indemnitee harmless
therefrom.
(h) The
Company acknowledges that a settlement or other disposition short of final
judgment may be successful if it permits a party to avoid expense, delay,
distraction, disruption and uncertainty. In the event that any
action, claim or proceeding to which the Indemnitee is a party is resolved in
any manner other than by adverse judgment against the Indemnitee (including,
without limitation, settlement of such action, claim or proceeding with or
without payment of money or other consideration) it shall be presumed that the
Indemnitee has been successful on the merits or otherwise in such action, suit
or proceeding. Anyone seeking to overcome this presumption shall have
the burden of proof and the burden of persuasion by clear and convincing
evidence.
(i) The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of the Indemnitee to
indemnification or create a presumption that the Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that the Indemnitee had reasonable cause to believe that his conduct was
unlawful.
7. Remedies of
Indemnitee.
(a) In
the event that (i) a determination is made pursuant to Section 6 of this
Agreement that the Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this
Agreement, (iii) no determination of entitlement to indemnification is made
pursuant to Section
6(b) of this Agreement within ninety (90) days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is
not made pursuant to this Agreement within ten (10) days after receipt by the
Company of a written request therefor or (v) payment of indemnification is not
made within ten (10) days after a determination has been made that the
Indemnitee is entitled to indemnification or such determination is deemed to
have been made pursuant to Section 6 of this
Agreement, the Indemnitee shall be entitled to an adjudication in an appropriate
court of the State of Nevada, or in any other court of competent jurisdiction,
of the Indemnitee’s entitlement to such indemnification. The
Indemnitee shall commence such
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proceeding
seeking adjudication within one (1) year following the date on which the
Indemnitee first has the right to commence such proceeding pursuant to this
Section
7(a). The Company shall not oppose the Indemnitee’s right to
seek any such adjudication.
(b) In
the event that a determination shall have been made pursuant to Section 6(b) of this
Agreement that the Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 7 shall be
conducted in all respects as a de novo trial on the merits, and the Indemnitee
shall not be prejudiced by reason of the adverse determination under Section 6(b) of this
Agreement.
(c) If
a determination shall have been made pursuant to Section 6(b) of this
Agreement that the Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding commenced pursuant to
this Section 7,
absent (i) a misstatement by the Indemnitee of a material fact, or an omission
of a material fact necessary to make the Indemnitee’s misstatement not
materially misleading in connection with the application for indemnification, or
(ii) a prohibition of such indemnification under applicable law.
(d) In
the event that the Indemnitee, pursuant to this Section 7, seeks a
judicial adjudication of his rights under, or to recover damages for breach of,
this Agreement, or to recover under any directors’ and officers’ liability
insurance policies maintained by the Company, the Company shall pay on his
behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in this Agreement) actually and reasonably incurred by
him in such judicial adjudication, regardless of whether the Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.
(e) The
Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 7 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court that the Company is bound by
all the provisions of this Agreement. The Company shall indemnify the
Indemnitee against any and all Expenses and, if requested by the Indemnitee,
shall (within ten (10) days after receipt by the Company of a written request
therefore) advance, to the extent not prohibited by law, such expenses to the
Indemnitee, which are incurred by the Indemnitee in connection with any action
brought by the Indemnitee for indemnification or advance of Expenses from the
Company under this Agreement or under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether the
Indemnitee ultimately is determined to be entitled to such indemnification,
advancement of Expenses or insurance recovery, as the case may be.
(f) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement
to indemnification under this Agreement shall be required to be made prior to
the final disposition of the Proceeding.
8. Non-Exclusivity; Survival of
Rights; Insurance; Subrogation.
(a) The
rights of indemnification as provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may at any time be
entitled
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under
applicable law, the articles of incorporation and the bylaws of the Company, any
agreement, a vote of stockholders, a resolution of directors or
otherwise. No amendment, alteration or repeal of this Agreement or of
any provision hereof shall limit or restrict any right of the Indemnitee under
this Agreement in respect of any action taken or omitted by the Indemnitee in
his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in the NGCL, whether by statute
or judicial decision, permits greater indemnification than would be afforded
currently under the articles of incorporation and the bylaws of the Company and
this Agreement, it is the intent of the parties hereto that the Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be
exclusive of any other right or remedy, and every other right and remedy shall
be cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other right or
remedy.
(b) To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents or fiduciaries
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise that such person serves at the request
of the Company, the Company shall obtain coverage for the Indemnitee under such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any director, officer, employee, agent or
fiduciary under such policy or policies. If, at the time of the
receipt of a notice of a claim pursuant to the terms hereof, the Company has
director and officer liability 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 the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
(c) [The
Company hereby acknowledges that the Indemnitee has certain rights to
indemnification, advancement of expenses and/or insurance provided by the
Indemnified Fund and certain of its affiliates (collectively, the “Fund
Indemnitors”). The Company hereby agrees that it: (i) is the
indemnitor of first resort (i.e., its obligations to the
Indemnitee are primary and any obligation of the Fund Indemnitors to advance
expenses or to provide indemnification for the same expenses or liabilities
incurred by the Indemnitee are secondary); (ii) shall be required to advance the
full amount of expenses incurred by the Indemnitee and shall be liable for the
full amount of all Expenses, judgments, penalties, fines and amounts paid in
settlement to the extent legally permitted and as required by the terms of this
Agreement and the articles of incorporation and the bylaws of the Company (or
any other agreement between the Company and the Indemnitee), without regard to
any rights the Indemnitee may have against the Fund Indemnitors; and (iii)
irrevocably waives, relinquishes and releases the Fund Indemnitors from any and
all claims against the Fund Indemnitors for contribution, subrogation or any
other recovery of any kind in respect thereof. The Company further
agrees that no advancement or payment by the Fund Indemnitors on behalf of the
Indemnitee with respect to any claim for which the Indemnitee has sought
indemnification from the Company shall affect the foregoing and that the Fund
Indemnitors shall have a right of contribution and/or be subrogated to the
extent of such advancement or payment to all of the
9
rights of
recovery of the Indemnitee against the Company. The Company and the
Indemnitee agree that the Fund Indemnitors are express third party beneficiaries
of this Section
8(c).]
(d) [Except
as provided in Section
8(c) of this Agreement, i][I]n the event of any 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 papers
required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.
(e) [Except
as provided in Section
8(c) of this Agreement, t][T]he Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that the Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or
otherwise.
(f) [Except
as provided in Section
8(c) of this Agreement, t][T]he Company's obligation to indemnify or
advance Expenses hereunder to the Indemnitee who is or was serving at the
request of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise shall be reduced by any amount the Indemnitee has actually received
as indemnification or advancement of expenses from such other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise.
9. Exception to Right of
Indemnification. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against the Indemnitee:
(a) for
which payment has actually been made to or on behalf of the Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess
beyond the amount paid under any insurance policy or other indemnity provision[
or as provided in Section 8(c) of this
Agreement]; or
(b) for
an accounting of profits made from the purchase and sale (or sale and purchase)
by the Indemnitee of Company securities pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory law or common law; or
(c) in
connection with any Proceeding (or any part of any Proceeding) initiated by the
Indemnitee (including, without limitation, any Proceeding (or any part of any
Proceeding) initiated by the Indemnitee against the Company or its directors,
officers, employees or other indemnitees), unless (i) the Board authorized the
Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, in its sole discretion, pursuant to the
powers vested in the Company under applicable law.
10. [Indemnity of Indemnified
Fund. The Company shall indemnify each of the Indemnified Fund
and its affiliates, general and limited partners, employees and representatives
(each, an “Indemnified
Fund Party”) and hold each Indemnified Fund Party harmless from and
against any and all Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by or on behalf of such Indemnified
Fund Party in
10
connection
with any Proceeding, any similar proceeding by reason of any Indemnified Fund
Party’s Corporate Status or any claim, issue or matter therein; provided,
however, that the Company shall not be responsible to an Indemnified Fund Party
with respect to any amounts payable pursuant to this Section 10 to the extent
that a court of competent jurisdiction shall have determined by a final judgment
not subject to further appeal that such amounts payable resulted from actions
taken or omitted to be taken by such Indemnified Fund Party due to such
Indemnified Fund Party’s gross negligence, bad faith or willful
misconduct. The Company shall advance all Expenses reasonably
incurred by or on behalf of such Indemnified Fund Party in connection therewith
within thirty (30) days after the receipt by the Company of a statement or
statements from such Indemnified Fund Party requesting such advance payment or
payments from time to time so long as such Indemnified Fund Party has delivered
to the Company a written undertaking pursuant to which such Indemnified Fund
Party agrees to return all advanced amounts in the event it is ultimately
determined that such Indemnified Fund Party is not entitled to indemnification
under this Section
10. The foregoing arrangements shall be in addition to any
rights that any Indemnified Fund Party may have under law or
otherwise.]
11. Duration of
Agreement. All agreements and obligations of the Company
contained herein shall continue during the period the Indemnitee is a director
of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter for (i) an
additional three (3) years or (ii) so long as the Indemnitee shall be subject to
any Proceeding (or any proceeding commenced under Section 7 of this
Agreement) by reason of his Corporate Status, whether or not he is acting or
serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement, whichever such
additional term is longer. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including, without limitation, any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives.
12. Security. To
the extent requested by the Indemnitee and approved by the Board, the Company
may at any time and from time to time provide security to the Indemnitee for the
Company’s obligations hereunder through an irrevocable bank line of credit,
funded trust or other collateral. Any such security, once provided to
the Indemnitee, may not be revoked or released without the prior written consent
of the Indemnitee.
13. Enforcement.
(a) The
Company expressly confirms and agrees that it has entered into this Agreement
and assumes the obligations imposed on it hereby in order to induce the
Indemnitee to serve as a director of the Company, and the Company acknowledges
that the Indemnitee is relying upon this Agreement in serving as a director of
the Company.
(b) This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.
14. Definitions. For
purposes of this Agreement:
11
(a) “Corporate Status”
means the status of a person who is or was a director, officer, employee, agent
or fiduciary of or consultant to the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
that such person is or was serving at the express written request of the
Company.
(b) “Disinterested
Director” means a director of the Company who is not and was not a party
to the Proceeding in respect of which indemnification is sought by the
Indemnitee.
(c) “Enterprise” means the
Company and any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise that the Indemnitee is or was serving at the
express written request of the Company as a director, officer, employee, agent
or fiduciary.
(d) “Expenses” means all
reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of
experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a
Proceeding. Expenses also shall include Expenses incurred in
connection with any appeal resulting from any Proceeding (including, without
limitation) the premium, security for, and other costs relating to any cost
bond, supersede as bond, or other appeal bond or its
equivalent). Expenses, however, shall not include amounts paid in
settlement by the Indemnitee or the amount of judgments or fines against the
Indemnitee.
(e) “Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five (5) years has
been, retained to represent (i) the Company or the Indemnitee in any matter
material to either such party (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “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 the Indemnitee
in an action to determine the Indemnitee’s rights under this
Agreement. The Company agrees to pay the reasonable fees of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
(f) “Proceeding” means any
threatened, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought by or in the
right of the Company or otherwise and whether civil, criminal, administrative or
investigative, in which the Indemnitee was, is or will be involved as a party or
otherwise, by reason of the fact that the Indemnitee is or was an officer or
director of the Company, by reason of any action taken by him or of any inaction
on his part while acting as an officer or director of the Company, or by reason
of the fact that he is or was serving at the request of the Company as a
director,
12
officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust or other Enterprise; in each case whether or not he is acting or serving
in any such capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement; but excluding any such
proceeding initiated by the Indemnitee pursuant to Section 7 of this
Agreement to enforce his rights under this Agreement.
15. Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. Without
limiting the generality of the foregoing, this Agreement is intended to confer
upon the Indemnitee indemnification rights to the fullest extent permitted by
applicable laws. In the event any provision hereof conflicts with any
applicable law, such provision shall be deemed modified, consistent with the
aforementioned intent, to the extent necessary to resolve such
conflict.
16. Modification and
Waiver. No supplement, modification, termination 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 provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing
waiver.
17. Notice By Indemnitee[ or
Indemnified Fund]. The Indemnitee [agrees][ and the
Indemnified Fund each agree] promptly to notify the Company in writing upon
being served with or otherwise receiving any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered
hereunder. The failure to so notify the Company shall not relieve the
Company of any obligation which it may have to the Indemnitee[ or any
Indemnified Fund Party] under this Agreement or otherwise unless and only to the
extent that such failure or delay materially prejudices the
Company.
18. Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified; (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient, and if not so
confirmed, then on the next business day; (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid;
or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt. All communications shall be sent:
To the Indemnitee, at the address set
forth on the signature page hereto.
[To the Indemnified Fund, at the
address set forth on the signature page hereto.]
To the
Company, at:
Pharmos
Corporation
00 Xxxx
Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxx Xxxxxx 00000
Attention:
President and Chief Financial Officer
13
or to
such other address as may have been furnished to the Indemnitee by the Company
or to the Company by the Indemnitee, as the case may be.
19. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
Agreement. This Agreement may also be executed and delivered by
facsimile signature and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
20. Headings. The
headings of the paragraphs of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
21. Governing Law and Consent to
Jurisdiction. This Agreement and the legal relations among the
parties shall be governed by, and construed and enforced in accordance with, the
laws of the State of Nevada, without regard to its conflict of laws rules. The
parties hereto hereby irrevocably and unconditionally: (a) agree that any action
or proceeding arising out of or in connection with this Agreement shall be
brought only in the appropriate courts of the State of Nevada (the “Nevada Court”), and
not in any other state or federal court in the United States of America or any
court in any other country; (b) consent to submit to the exclusive jurisdiction
of the Nevada Court for purposes of any action or proceeding arising out of or
in connection with this Agreement; (c) appoint, to the extent such party is not
otherwise subject to service of process in the State of Nevada, irrevocably
National Corporate Research, Ltd., 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxx Xxxx, XX
00000 as its agent in the State of Nevada as such party’s agent for acceptance
of legal process in connection with any such action or proceeding against such
party with the same legal force and validity as if served upon such party
personally within the State of Nevada; (d) waive any objection to the laying of
venue of any such action or proceeding in the Nevada Court; and (e) waive, and
agree not to plead or to make, any claim that any such action or proceeding
brought in the Nevada Court has been brought in an improper or inconvenient
forum. The Company shall provide National Corporate Research Ltd.
with a current mailing address for the Indemnitee and bear the cost of engaging
National Corporate Research Ltd. to act as agent for service of process for the
Indemnitee.
[SIGNATURE
PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on and as of the day and year first above
written.
COMPANY:
PHARMOS
CORPORATION
By:
Name:
Title:
INDEMNITEE:
______________________________________
[________]
Address:
[________]
[INDEMNIFIED FUND:
[________]
By:
Name:
Title:
Address:
[________]]
[Signature
page to Director Indemnification Agreement]
