EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of _______, 20__
by and between National Patent Development Corporation, a Delaware corporation
(the "Company"), and _________ ("Indemnitee").
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve
publicly-held 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 Company's
Amended and Restated By-Laws ("By-Laws") and Restated Certificate of
Incorporation, as amended, ("Certificate of Incorporation") require
indemnification of the officers and directors of the Company. Indemnitee may
also be entitled to indemnification pursuant to the General Corporation Law of
the State of Delaware ("DGCL"). The By-Laws, Certificate of Incorporation and
the DGCL 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, 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 to
contractually obligate itself to indemnify, and to advance expenses on behalf
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
By-Laws, Certificate of Incorporation and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder;
WHEREAS, Indemnitee does not regard the protection available under the
By-laws, Certificate of Incorporation and the Company's insurance as adequate in
the present circumstances, and may not be willing to serve as an officer or
director without adequate protection, and the Company desires Indemnitee to
serve in such capacity. 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
he be so indemnified; and
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services to the Company. Indemnitee agrees to serve as a [director]
[officer] of the Company. Indemnitee may at any time and for any reason resign
from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in such position. This
Agreement shall not be deemed an employment contract between the Company (or any
of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically
acknowledges that Indemnitee's employment with the Company (or any of its
subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be
discharged at any time for any reason, with or without cause, except as may be
otherwise provided in any written employment contract between Indemnitee and the
Company (or any of its subsidiaries or any Enterprise), other applicable formal
severance policies duly adopted by the Board, or, with respect to service as a
director or officer of the Company, by the Certificate of Incorporation, the
By-Laws, and the DGCL. The foregoing notwithstanding, this Agreement shall
continue in force after Indemnitee has ceased to serve as an [director]
[officer] of the Company.
Section 2. Definitions. As used in this Agreement:
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(a) A "Change in Control" shall be deemed to occur upon the earliest to occur
after the date of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below) is or
becomes the Beneficial Owner (as defined below), directly or indirectly, of
securities of the Company representing 15% or more of the combined voting power
of the Company's then outstanding securities; provided, however, that any Person
who is a Beneficial Owner, directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power on the date hereof shall
not be deemed to trigger a Change of Control within the meaning of this
definition;
ii. Change in Board of Directors. During any period of two consecutive years
(not including any period prior to the execution of this Agreement), individuals
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who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in Sections 2(a)(i),
2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds 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 at least a majority of the members of the
Board;
iii. Corporate Transactions. The effective date of a merger or consolidation of
the Company with any other entity, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 51% of the combined voting power of the voting
securities of the surviving entity outstanding immediately after such merger or
consolidation and with the power to elect at least a majority of the board of
directors or other governing body of such surviving entity;
iv. Liquidation. The approval by the stockholders of the Company of a complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; and
v. Other Events. There occurs any other event of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a
response to any similar item on any similar schedule or form) promulgated under
the Exchange Act (as defined below), whether or not the Company is then subject
to such reporting requirement.
For purposes of this Section 2(a), the following terms shall have the following
meanings:
(A) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(B) "Person" shall have the meaning as set forth in
Sections 13(d) and 14(d) of the Exchange Act; provided,
however, that Person shall exclude (i) the Company; (ii) any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company; and (iii) any
corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
(C) "Beneficial Owner" shall have the meaning given
to such term in Rule 13d-3 under the Exchange Act; provided,
however, that Beneficial Owner shall exclude any Person
otherwise becoming a Beneficial Owner by reason of the
stockholders of the Company approving a merger of the Company
with another entity.
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(b) "Corporate Status" describes the status of a person who is or was a
director, officer, employee or agent of the Company or of any other corporation,
limited liability company, partnership or joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the request of
the Company.
(c) "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
Indemnitee.
(d) "Enterprise" shall mean the Company and any other corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan or
other enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary.
(e) "Expenses" shall include 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, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses also shall include (i)
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, supersedeas bond, or other appeal bond or its equivalent; and
(ii) for purposes of Section 13(d) only, Expenses incurred by Indemnitee in
connection with the interpretation, enforcement or defense of Indemnitee's
rights under this Agreement, by litigation or otherwise. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(f) "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 years has been, retained to represent: (i) the Company or 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 Indemnitee in
an action to determine Indemnitee's rights under this Agreement. The Company
agrees to pay the reasonable fees and expenses 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.
(g) The term "Proceeding" shall include 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 in the right of the Company or
otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee was, is or will be involved as a party or otherwise
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by reason of the fact that Indemnitee is or was a director or officer of the
Company, by reason of any action taken by him or of any action on his part while
acting as director or officer of the Company, or by reason of the fact that he
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, limited liability company, partnership, joint
venture, trust or other enterprise, in each case whether or not serving in such
capacity at the time any liability or expense is incurred for which
indemnification, reimbursement, or advancement of expenses can be provided under
this Agreement; except one initiated by an Indemnitee to enforce his rights
under this Agreement.
(h) Reference to "other enterprise" shall include employee benefit plans
References to "fines" shall include any excise tax assessed with respect to any
employee benefit plan. References to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries. A person who acted in good faith and in a manner
he reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
manner "not opposed to the best interests of the Company."
Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is,
or is threatened to be made, a party to or a participant in any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the
fullest extent permitted by applicable law against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
Indemnitee or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and, in the case of a criminal proceeding had no reasonable cause to believe
that his conduct was unlawful.
Section 4. Indemnity in Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee is, or is threatened to be made, a party to or a
participant in any Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company. No indemnification for Expenses shall be made
under this Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged by a court to be liable to the
Company, unless and only to the extent that the Delaware Court of Chancery or
any court in which the Proceeding was brought shall determine 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 indemnification.
Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
fullest extent permitted by applicable law and to the extent that Indemnitee is
a party to (or a participant in) and is successful, on the merits or otherwise,
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in any Proceeding or in defense of any claim, issue or matter therein, in whole
or in part, the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. If the Indemnitee is not wholly
successful in such Proceeding, the Company also shall indemnify Indemnitee
against all Expenses reasonably incurred in connection with a claim, issue or
matter related to any claim, issue, or matter on which the Indemnitee was
successful. For purposes of this Section 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.
Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the fullest extent permitted by applicable law
and to the extent that Indemnitee is, by reason of his Corporate Status, a
witness in any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
Section 7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall
indemnify Indemnitee to the fullest extent permitted by applicable law if
Indemnitee is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgment
in its favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with the
Proceeding.
(b) For purposes of Section 7(a), the meaning of the phrase "to the fullest
extent permitted by applicable law" shall include, but not be limited to:
i. to the fullest extent permitted by the provision of the DGCL that authorizes
or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and
ii. to the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement that increase
the extent to which a corporation may indemnify its officers and directors.
Section 8. Exclusions. 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 Indemnitee:
(a) for which payment has actually been made to or on behalf of 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;
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(b) for (i) an accounting of profits made from the purchase and sale (or sale
and purchase) by Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Exchange Act (as defined in Section 2(a) hereof) or similar
provisions of state statutory law or common law; or (ii) any reimbursement of
the Company by the Indemnitee of any bonus or other incentive-based or
equity-based compensation or of any profits realized by the Indemnitee from the
sale of securities of the Company, as required in each case under the Exchange
Act; or
(c) except as provided in Section 13(d), in connection with any Proceeding (or
any part of any Proceeding) initiated by Indemnitee, including any Proceeding
(or any part of any Proceeding) initiated by 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.
Section 9. Advances of Expenses. Notwithstanding any provision of this Agreement
to the contrary, the Company shall advance, to the extent not prohibited by law,
the Expenses incurred by Indemnitee in connection with any Proceeding, and such
advancement shall be made within 30 days after the receipt by the Company of a
statement or statements requesting such advances from time to time, whether
prior to or after final disposition of any Proceeding. Advances shall be
unsecured and interest free. Advances shall be made without regard to
Indemnitee's ability to repay the Expenses and without regard to Indemnitee's
ultimate entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing an action to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the
advances claimed. The Indemnitee shall qualify for advances upon the execution
and delivery to the Company of this Agreement, which shall constitute an
undertaking providing that the Indemnitee undertakes to repay the advance to the
extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company. This Section 9 shall not apply to any claim made by
Indemnitee for which indemnity is excluded pursuant to Section 8.
Section 10. Procedure for Notification and Defense of Claim.
(a) In order to obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, which shall include documentation and
information that is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification following the final disposition of such action, suit or
proceeding. Indemnitee's failure to notify the Company will not relieve the
Company from any liability that it may have to Indemnitee or otherwise than
under this Agreement. The Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) The Company will be entitled to participate in the Proceeding at its own
expense.
Section 11. Procedure Upon Application for Indemnification.
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(a) Upon written request by Indemnitee for indemnification pursuant to the
Section 10(a), a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made:
(i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; or
(ii) if a Change in Control shall not have occurred,
(A) by a majority vote of the Disinterested
Directors, even though less than a quorum of the Board;
(B) by a committee of Disinterested Directors
designated by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board;
(C) if there are no Disinterested Directors or, if
the Disinterested Directors direct, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee;
or
(D) if directed by the Board, by the stockholders of
the Company.
If it is determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within 10 days after such determination. Indemnitee
shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee's entitlement to indemnification, which will include
providing to such person, persons or entity upon reasonable advance request
documentation or information that is not privileged or otherwise protected from
disclosure and that is reasonably available to Indemnitee and reasonably
necessary for such determination. Any costs or Expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating shall be borne
by the Company (regardless of the ultimate determination as to Indemnitee's
entitlement to indemnification) and the Company hereby indemnifies and agrees to
hold Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 11(a), the Independent Counsel
shall be selected as provided in this Section 11(b). If a Change in Control
shall not have occurred, the Independent Counsel shall be selected by the Board,
and the Company shall give written notice to Indemnitee advising him of the
identity of the Independent Counsel so selected. If a Change in Control shall
have occurred, the Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board, in which
event the preceding sentence shall apply), and Indemnitee shall give written
notice to the Company of the identity of the Independent Counsel. In either
event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, 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 does not meet the requirements of "Independent Counsel"
as defined in Section 2. The objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the
person selected shall act as Independent Counsel. If a written objection is made
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and substantiated, the Independent Counsel may not serve as Independent Counsel
unless and until the objection is withdrawn or a court has determined that
objection is without merit. If no Independent Counsel shall have been selected
and not objected to within 20 days after the later of (i) submission by
Indemnitee of a written request for indemnification pursuant to Section 10(a)
and (ii) the final disposition of the Proceeding, then either the Company or
Indemnitee may petition a court of competent jurisdiction to resolve any
objection that shall have been made by the Company or Indemnitee to the other's
selection of Independent Counsel and/or for the appointment of an Independent
Counsel by the Court (or by such other person as the Court shall designate). The
person with respect to whom all objections are resolved or the person appointed
shall act as Independent Counsel under Section 11(a). Upon the due commencement
of any judicial proceeding or arbitration pursuant to Section 13(a), Independent
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
Section 12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination shall, to the
fullest extent not prohibited by law, presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 10(a). The Company shall, to the
fullest extent not prohibited by law, have the burden of proof to overcome that
presumption. Neither the failure of the Company (including by its directors or
independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is
proper because Indemnitee has met the applicable standard of conduct, nor an
actual determination by the Company (including by its directors or independent
legal counsel) that Indemnitee has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that Indemnitee has not
met the applicable standard of conduct.
(b) Subject to Section 13(e), if the person, persons or entity empowered or
selected under Section 11 to determine whether Indemnitee is entitled to
indemnification does not make a determination within 60 days after receipt by
the Company of the request therefor, then the requisite determination shall, to
the fullest extent not prohibited by law, be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary to
make 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 30 days, if the person, persons or
entity making the determination requires in good faith such additional time in
order to obtain and evaluate documentation and/or information relating thereto.
The foregoing provisions of this Section 12(b) shall not apply if:
(i) the determination of entitlement to indemnification is to
be made by the stockholders pursuant to Section 11(a) and if:
(A) within 15 days after receipt by the Company of
the request for such determination the Board has resolved to submit
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such determination to the stockholders for their consideration at an
annual meeting thereof to be held within 75 days after such receipt and
such determination is made at such annual meeting; or
(B) a special meeting of stockholders is called
within 15 days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within 60 days
after having been so called and such determination is made at such
special meeting; or
(ii) if the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 11(a).
(c) 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) adversely affect the right of Indemnitee to indemnification or create
a presumption that 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 Indemnitee had
reasonable cause to believe that his conduct was unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is
based on (i) the records or books of account of the Enterprise, including
financial statements; (ii) information supplied to 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 the reasonable care by the Enterprise. The provisions
of this Section 12(d) shall not be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct set forth in this Agreement.
(e) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this
Agreement.
Section 13. Remedies of Indemnitee.
(a) Subject to Section 13(e), in the event that (i) a determination is made
pursuant to Section 11 that Indemnitee is not entitled to indemnification under
this Agreement; (ii) advancement of Expenses is not timely made pursuant to
Section 9; (iii) no determination of entitlement to indemnification shall have
been made pursuant to Section 11(a) of this Agreement within 90 days after
receipt by the Company of the request for indemnification; (iv) payment of
indemnification is not made pursuant to Section 5 or 6 or the last sentence of
Section 11(a) within 10 days after receipt by the Company of a written request
therefor; (v) payment of indemnification pursuant to Section 3, 4 or 7 is not
made within 10 days after a determination has been made that Indemnitee is
entitled to indemnification; or (vi) the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or Proceeding designed to deny, or to
recover from, the Indemnitee the benefits provided or intended to be provided to
the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a
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court of his entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 13(a); provided, however, that the foregoing clause
shall not apply in respect of a proceeding brought by Indemnitee to enforce his
rights under Section 5. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section
11(a) that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 13 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. In
any judicial proceeding or arbitration commenced pursuant to this Section 13,
the Company shall have the burden of proving Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section 11(a) that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification; or
(ii) a prohibition of such indemnification under applicable law.
(d) The Company shall, to the fullest extent not prohibited by law, be precluded
from asserting in any judicial proceeding or arbitration commenced pursuant to
this Section 13 that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of this
Agreement. It is the intent of the Company that the Indemnitee not be required
to incur legal fees or other Expenses associated with the interpretation,
enforcement or defense of Indemnitee's rights under this Agreement by litigation
or otherwise because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Indemnitee hereunder. The
Company shall indemnify Indemnitee against any and all Expenses and, if
requested by Indemnitee, shall (within 10 days after receipt by the Company of a
written request therefor) advance, to the extent not prohibited by law, such
Expenses to Indemnitee, which are incurred by Indemnitee in connection with any
action brought by 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 Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
Expenses or insurance recovery, as the case may be.
(e) 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.
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Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advances of Expenses hereunder
shall not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the By-Laws, the Certificate of
Incorporation, any agreement, a vote of stockholders or 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 Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal. To the
extent that a change in Delaware law, whether by statute or judicial decision,
permits greater indemnification or advancement of Expenses than would be
afforded currently under the By-Laws, the Certificate of Incorporation and this
Agreement, it is the intent of the parties hereto that 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. To the extent that any rights of
indemnification and to receive advances of Expenses hereunder are inconsistent
with those provided for under the By-Laws, the Certificate of Incorporation or
applicable law, it is the intent of the parties that the rights most favorable
to the Indemnitee under the By-Laws, the Certificate of Incorporation, this
Agreement or applicable law shall govern.
(b) To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, or agents of
the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent 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 its 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) In 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
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including executing documents that are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.
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(e) The Company's obligation to indemnify or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director,
officer, employee or agent of any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise
shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of Expenses from such other corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan or
other enterprise.
Section 15. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as a [director] [officer] of the Company; or (b) one year
after the final termination of any Proceeding then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13
relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
Section 16. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, remaining portions of any Section
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent
permitted by law; (b) such provision or provisions shall be deemed reformed to
the extent necessary to conform to applicable law and to give the maximum effect
to the intent of the parties hereto; and (c) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, remaining portions
of any Section containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
Section 17. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order to induce
Indemnitee to serve as a director or officer of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving as a
director or officer 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; provided, however, that this Agreement is
a supplement to and in furtherance of the By-Laws, the Certificate of
Incorporation and applicable law, and shall not be deemed a substitute
therefore, nor to diminish or abrogate any rights of Indemnitee thereunder.
Section 18. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
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thereto. 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 nor shall
any waiver constitute a continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise.
Section 20. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if (a) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed; (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed; (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have
been directed; or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:
(a) If to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide to the Company.
(b) If to the Company to:
National Patent Development Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attn: _____________________
or to any other address as may have been furnished to Indemnitee by the Company.
Section 21. Contribution. To the fullest extent permissible under applicable
law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by 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 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 Indemnitee in connection with such event(s) and/or
transaction(s).
Section 22. Applicable 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 Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 13(a), the Company and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising
14
out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the "Delaware Court"), and not in any
other state or federal court in the United States of America or any court in any
other country; (ii) consent to submit to the exclusive jurisdiction of the
Delaware Court for purposes of any action or proceeding arising out of or in
connection with this Agreement; (iii) appoint, to the extent such party is not
otherwise subject to service of process in the State of Delaware, irrevocably
____________ as its agent in the State of Delaware 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 Delaware; (iv) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court; and (v)
waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.
Section 23. 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 one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. 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.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the day and year first above written.
NATIONAL PATENT DEVELOPMENT
CORPORATION INDEMNITEE
By:
--------------------------------- --------------------------
Name: Name:
Title: Title:
Address:
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