EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
In consideration of the agreement of FIRST GRANITE SECURITIES, INC.
(hereinafter "Distributor") to act on behalf of XXXXXXXXXX LABORATORIES, INC.
(the "Company") pursuant to the Placement Agent Agreement (the "Agreement")
dated ______________, 1996, the Company agrees to indemnify and hold harmless
Distributor and each of its directors, officers, agents, employees and
controlling persons (within the meaning of the Securities Act of 1933, as
amended) (Distributor and each such other person or entity are hereinafter
referred to as an "Indemnified Person"), from and against any losses, claims,
damages, expenses and liabilities or actions in respect thereof (collectively
"Losses"), as they may be incurred including all reasonable legal fees and
other reasonable expenses incurred in connection with investigating,
preparing, defending, paying, settling or compromising any Losses (whether
or not in connection with any pending or threatened litigation in which any
Indemnified Person is a named party) to which any of them may become subject
(including in any settlement effected with the Company's consent) as a result
of any claim, investigation or legal proceeding made or instituted by any
third party relating to or arising out of Distributor's engagement under the
Agreement (excluding any engagement that may arise out of the right of first
refusal set forth in Section 9 of the Agreement). The Company will not,
however, be responsible under the foregoing provisions with respect to any
Losses (a) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such Losses resulted primarily from
actions taken or omitted to be taken by an Indemnified Person due to its
gross negligence, bad faith, willful misconduct, or breach of any covenant,
representation or warranty in the Agreement, (b) resulting solely from one
or more decreases in the market price of the Company's common stock, or (c)
to the extent that such Losses consist of amounts paid or agreed to be paid
in settlement of any claim or lawsuit, if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld.
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If the indemnity referred to in this agreement should be, for any reason
whatsoever (other than any of the reasons set forth in the last sentence of
the immediately preceding paragraph), unenforceable, unavailable or otherwise
insufficient to hold such Indemnified Person harmless for any Losses for
which the Company has agreed to hold such Indemnified Person harmless
hereunder, the Company shall pay to or on behalf of each Indemnified Person
contributions for Losses so that each Indemnified Person ultimately bears
only a portion of such Losses as is appropriate (i) to reflect the relative
benefits received by each such Indemnified Person, respectively, on the one
hand and the Company on the other hand in connection with the transaction,
or (ii) if the allocation on that basis is not permitted by applicable law,
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of each such Indemnified Person, respectively, and
the Company as well as any other relevant equitable considerations; provided,
however, that in no event shall the aggregate contribution of all Indemnified
Persons to all Losses in connection with any transaction exceed the value of
the consideration actually received by Distributor pursuant to the Agreement.
The respective relative benefits received by Distributor and the Company in
connection with any transaction shall be deemed to be in the same proportion
as the aggregate consideration received by Distributor in connection with the
transaction bears to the total consideration of the transaction. The
relative fault of each Indemnified Person and the Company shall be determined
by reference to, among other things, whether the actions or omissions to act
were by such Indemnified Person or the Company, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action or omission to act.
The Company also agrees that no Indemnified Person shall have any liability
to the Company or its affiliates, directors, officers, employees, agents or
shareholders, directly or indirectly, related to or arising out of the
Agreement, except that each Indemnified Person shall indemnify and hold
harmless the Company, its directors, officers, agents, consultants and
controlling persons from and against any Losses as they are incurred, which
result primarily from actions taken or omitted to be taken by such
Indemnified Person due to its gross negligence, bad faith, willful misconduct
or breach of any covenant, representation or warranty made by Distributor in
the Agreement. In no event, regardless of the legal theory advanced, shall
the Company or any Indemnified Person be liable for any consequential,
indirect, incidental or special damages of any nature.
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If any action is brought against any Indemnified Person in respect of which
indemnity may be sought against the Company hereunder, such Indemnified
Person shall promptly notify the Company in writing of such action and the
Company shall be entitled to participate therein and, to the extent the
Company shall wish, assume the defense thereof. Upon the request of an
Indemnified Person, the Company shall retain counsel reasonably satisfactory
to such Indemnified Person to represent such Indemnified Person and any
others the Company may designate in such action and shall pay the reasonable
fees and expenses of such counsel related thereto as they are incurred. In
any such action, an Indemnified Person shall have the right to retain its own
counsel at its own expense, except that the Company shall pay as they are
incurred the reasonable fees and expenses of counsel retained by such
Indemnified Person only in the event that (i) the Company and such
Indemnified Person shall have mutually agreed to the retention of such
counsel or (ii) the Company has directed counsel to represent one or more
parties in addition to such Indemnified Person in such action, and in the
written opinion of such counsel, representation of both such Indemnified
Person and such other party or parties by the same counsel would be
inappropriate due to actual or potential conflict of interests between them,
it being understood that the Company shall not be liable for the reasonable
fees and expenses of more than one separate firm for all the Indemnified
Persons. No indemnification provided for herein shall be available to any
Indemnified Person that fails to give notice as provided above if the Company
was unaware of the action to which such notice would have related and was
substantially prejudiced by such failure or to any Indemnified Person that
retains its own counsel in accordance with the immediately preceding sentence
except in the circumstances set forth in clause (i) or (ii) thereof. The
Company agrees that without Distributor's prior written consent it shall not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding related to the Agreement unless
the settlement, compromise or consent also includes an express unconditional
release of all Indemnified Persons from all liability and obligations arising
therefrom. If the Company pays any amount to or for the benefit of any
Indemnified Person(s) pursuant to this agreement, and it is subsequently
determined by a final judgment of a court of competent jurisdiction that the
Company was not obligated to pay such amount hereunder, the Indemnified
Person(s) to or for whose benefit such amount was paid shall, upon demand by
the Company, immediately pay such amount in full to the Company.
The respective obligations of the Company and the Indemnified Persons
referred to above shall be in addition to any rights that any Indemnified
Person or the Company, as the case may be, may otherwise have and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of any Indemnified Person and the Company. It is
understood that the respective obligations of the Company and the Indemnified
Persons will remain operative regardless of any termination or completion of
Distributor's services pursuant to the Agreement.
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FIRST GRANITE SECURITIES, INC.
By: _____________________________________
Title: __________________________
XXXXXXXXXX LABORATORIES, INC.
By: _____________________________________
Title: __________________________
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