INDEMNIFICATION AND HOLD HARMLESS AGREEMENT
EXHIBIT 10.20
THIS INDEMNIFICATION AND HOLD HARMLESS AGREEMENT (this “Agreement”) is made as of March
, 2007, by and between Cumberland Pharmaceuticals Inc., a Tennessee corporation (the
“Company”), and (“Indemnitee”).
WHEREAS, in order to incentivize Indemnitee to serve, or to continue to serve, as a director
of the Company (in any such case, the “Service”), the Company has agreed to indemnify Indemnitee as
set forth below;
NOW, THEREFORE, in consideration of the foregoing and certain other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows:
1. Indemnification. Effective as of the original date of Indemnitee’s beginning
Service, the Company shall indemnify Indemnitee and hold Indemnitee harmless if Indemnitee is a
party or is threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or investigative, and in any
appeal in such action, suit or proceeding, and in any inquiry or investigation that could lead to
such an action, suit or proceeding, against any and all liabilities, obligations (whether known or
unknown, or due or to become due or otherwise), judgments, fines, fees, penalties, interest
obligations, deficiencies, other actual losses (for example, verifiable lost income related to time
spent defending such claim or action) and reasonable expenses (including, without limitation
amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees and
expenses of attorneys, accountants, financial advisors and other experts) incurred or suffered by
Indemnitee in connection with such action, suit or proceeding arising out of or pertaining to any
actual or alleged action or omission which arises out of or relates to the fact that Indemnitee is
or was serving as a director or officer of the Company or at the request of the Company as a
director, officer, trustee, employee, or agent of or in any other capacity for another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent permitted by then
applicable law and the Company’s Charter and Bylaws, each as amended (but in the case of any such
amendment, only to the extent that such amendment permits the Company to provide the same or
broader indemnification rights than permitted prior thereto) (each such liability, obligation,
judgment, fine, fee, penalty, interest obligation, deficiency, other actual losses, and reasonable
expenses being referred to herein as a “Loss,” and collectively, as “Losses”).
2. Payment. Any Loss incurred by Indemnitee shall be paid in full by the Company on
a regular, monthly basis. This indemnity applies even if Indemnitee caused the Loss through his or
her negligence, strict liability or other fault; however, if any Losses for which Indemnitee
received payment from the Company under this Agreement are determined by final judicial decision
from which there is no further right to appeal, to have been caused by Indemnitee under
circumstances with respect to which indemnification is not permitted by applicable law or this
Agreement (any such Loss, a “Non-Indemnification Loss”), Indemnitee shall repay to the Company such
Losses paid on behalf of Indemnitee hereunder.
Page 1
3. Term. The indemnification rights provided hereby to Indemnitee shall continue
even though he may have ceased to be a director, officer, trustee, employee, or agent of or in any
other capacity for the applicable entity.
4. Notice and Coverage Prior to Notice. Indemnitee shall give notice (the “Notice”)
to the Company within five days after actual receipt of service or summons related to any action
begun in respect of which indemnity may be sought hereunder or actual notice of assertion of a
claim with respect to which he seeks indemnification; provided, however, that Indemnitee’s failure
to give such notice to the Company within such time shall not relieve the Company from any of its
obligations under Section 1 of this Agreement except to the extent the Company has been materially
prejudiced by Indemnitee’s failure to give such notice within such time period. Upon receipt of the
Notice, the Company shall assume the defense of such action, whereupon Indemnitee shall not be
liable for any reasonable fees or expenses of counsel for Indemnitee or any other Losses incurred
thereafter with respect to the matters set forth in the Notice and the Company shall reimburse
Indemnitee for all reasonable expenses related to the action or claim incurred by Indemnitee prior
to Indemnitee’s giving of the Notice.
5. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any
rights that Indemnitee may have under the Company’s governance documents (e.g. Charter, Bylaws,
etc.) (the “Governance Documents”), applicable law or otherwise and shall survive any termination,
resignation, death or other dismissal of Indemnitee. No amendment or alteration of the Company’s
Governance Documents shall adversely affect Indemnitee’s rights under the Governance Documents or
this Agreement.
6. Insurance. To the extent the Company maintains, at its expense, an insurance
policy or policies providing liability insurance with respect to the acts or omissions covered by
this Agreement, Indemnitee shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available thereunder.
7. Payment. The Company shall not be liable to Indemnitee under this Agreement to
make any payment in connection with any claim against Indemnitee to the extent Indemnitee has
otherwise actually received, and is entitled to retain, payment (under any insurance policy or
otherwise) of the amounts otherwise indemnifiable hereunder.
8. Enforceability. The indemnification contained in this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by purchase, merger, consolidation,
liquidation or otherwise to all or substantially all of the business and/or assets of the Company),
spouses, heirs and personal and legal representatives.
9. Binding Obligation. If this Agreement or any portion hereof shall be found to be
invalid on any ground by any court of competent jurisdiction, then the Company shall nevertheless
indemnify and hold harmless Indemnitee, as to costs, charges and expenses (including court costs
and attorneys’ fees), judgments, fines, penalties and amounts paid in settlement with respect to
any action, suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, and in any appeal in such action, suit or proceeding, and in any inquiry or
investigation that could lead to such an action, suit or proceeding, to the full extent permitted
by any applicable portion of this Agreement that shall not have been invalidated and to the fullest
extent permitted by applicable law.
Page 2
10. Governing Law; Venue. This Agreement shall be construed in accordance with and
governed by the laws of the State of Tennessee, without regard to the principles of conflicts of
laws. The parties agree that any litigation directly or indirectly relating to this Agreement must
be brought before and determined by a court of competent jurisdiction within Davidson County,
Tennessee, and the parties hereby agree to waive any rights to object to, and hereby agree to
submit to, the jurisdiction of such courts.
11. Right to Xxx; Attorneys’ Fees and Costs. If a claim by Indemnitee for payment of
Losses hereunder is not paid in full by the Company within forty-five (45) days after a written
claim has been delivered to the Company, Indemnitee may at any time thereafter bring suit against
the Company to recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, Indemnitee shall be entitled to be paid also the reasonable costs and expenses of
prosecuting such suit. In any suit brought by Indemnitee to enforce any right hereunder (including,
without limitation, the right to indemnification), the burden of proving that Indemnitee is not
entitled to such right shall be borne by the Company. If a claim by the Company for repayment of
any Non-Indemnification Losses previously paid on behalf of Indemnitee hereunder is not repaid in
full to the Company within forty-five (45) days after such ruling has been delivered to Indemnitee,
the Company may at any time thereafter bring suit against Indemnitee to recover the unpaid amount.
12. Amendment. This Agreement may be amended, modified or supplemented only by a
written instrument executed by each of the parties hereto.
13. Facsimile and Counterpart Signature. This Agreement may be executed by facsimile
signature and in one or more counterparts, each of which shall for all purposes be deemed an
original and all of which shall constitute the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.
| COMPANY | ||||||
| CUMBERLAND PHARMACEUTICALS INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| INDEMNITEE | ||||||
| [Insert Name] | ||||||
Page 3
