INDEMNIFICATION AGREEMENT
EXHIBIT 10.1
THIS AGREEMENT (the “Agreement”) is made and entered into as of , 2006 between Targacept, Inc., a Delaware corporation (the “Company”), and , a director, officer or member of the executive committee of the Company (“Indemnitee”).
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the Company; and
WHEREAS, the Board of Directors of the Company (the “Board”) has adopted bylaws (the “Bylaws”) providing for or permitting the indemnification of officers, directors and employees of the Company to the fullest extent permitted by the Delaware General Corporation Law, as amended (the “DGCL”); and
WHEREAS, the Bylaws and the DGCL, by their nonexclusive nature, permit agreements between the Company and its officers, directors and employees with respect to indemnification; and
WHEREAS, in order to induce Indemnitee to continue to serve as a director, officer or member of the executive (management) committee of the Company, the Company has agreed to enter into this agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee’s continued service as a director, officer or member of the executive committee of the Company after the date hereof, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) “Change of Control” means:
(i) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided that, notwithstanding the foregoing, none of the following acquisitions shall constitute a Change of Control: (1) an acquisition directly from the Company or from other stockholders that (x) was approved in advance by the Board and (y) would not constitute a Change of Control under Section 1(a)(iii); (2) an acquisition by the Company; (3) an acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by, or under common control with, the Company; or (4) an acquisition by an entity with respect to which the criteria set forth in Section 1(a)(iii)(A), (B) and (C) are met; or
(ii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”); provided that, notwithstanding the foregoing, a Business Combination shall not constitute a Change of Control if: (A) the individuals and entities who are the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors of the resulting, continuing or surviving entity in such Business Combination (including, if applicable, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportion as existed immediately prior to such Business Combination; (B) no Person (excluding the resulting, continuing or surviving entity in such Business Combination or any employee benefit plan (or related trust) of such resulting, continuing or surviving entity) beneficially owns, directly or indirectly, twenty percent (20%) or more of the then outstanding shares of common stock or of the combined voting power of the then outstanding voting securities of the resulting, continuing or surviving entity in such Business Combination, except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the resulting, continuing or surviving entity in such Business Combination are members of the Board at the time of the execution of the definitive agreement providing for such Business Combination or of its authorization and approval by the Board; or
(iii) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
(b) “Company Position” means the status of a person as a present or former director, officer, employee or agent of the Company or any other Enterprise.
(c) “Disinterested Director” means a director of the Company who is not and was not a party to the matter in respect of which indemnification or advancement of Expenses is sought by Indemnitee.
(d) “Enterprise” shall mean the Company or any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which Indemnitee serves, or did serve, at the request of the Company as a director, officer, employee or agent.
(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(f) “Expenses” shall include all judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement, 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 a type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating in, or being or preparing to be a witness in a Proceeding.
(g) “Independent Counsel” means a law firm, a partner or member of a law firm or an independent practitioner who (i) is experienced in matters of corporate law and (ii) would not, under the applicable standards of professional conduct then prevailing, 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.
(h) “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
(i) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding in which Indemnitee was, is or will be involved as a party or otherwise, whether brought by or in the right of the Company or otherwise, whether
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civil, criminal, administrative or investigative, whether pending before or after the date of this Agreement and 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 specifically excluding an action initiated by an Indemnitee pursuant to Section 8 to enforce his rights under this Agreement.
2. Indemnity of Indemnitee. The Company hereby agrees to indemnify and hold harmless Indemnitee to the fullest extent permitted by the provisions of the DGCL, as may be amended from time to time. Without limiting the generality of the foregoing:
(a) Proceedings Other Than Proceedings by or in the Right of the Company. If Indemnitee was, 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) by reason of his Company Position, the Company shall indemnify him against all Expenses actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding (including, without limitation, any claim, issue or matter included therein) if he 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 with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.
(b) Proceedings by or in the Right of the Company. If Indemnitee was, is or is threatened to be made a party to, or a participant in, any Proceeding by or in the right of the Company by reason of his Company Position, the Company shall indemnify him against all Expenses actually and reasonably incurred by him, or on his behalf, in connection with the defense or settlement of such Proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company; provided, however, if required by applicable law, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.
(c) Indemnification for Expenses of a Party who is Wholly or Partially Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Company Position, a party to, and is successful in defending (on the merits or otherwise), any Proceeding, the Company shall indemnify him to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him, or on his behalf, 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. For purposes of this Section 2(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.
3. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 2, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf if, by reason of his Company Position, he was, is or is threatened to be made, a party to, or participant in, any Proceeding (including 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 Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement, other than those specified in Section 12, shall be that the Company shall not be obligated to make any
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payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 7 and 8) to be unlawful under Delaware law.
4. Contribution in the Event of Joint Liability.
(a) Whether or not the indemnification provided in Sections 2 and 3 is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such Proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set forth in Section 4(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent required by law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses, as well as any other equitable considerations which are required to be considered under applicable law. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their respective 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 shall fully indemnify and hold harmless Indemnitee from any claims of contribution that may be brought by any one or more officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
5. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Company Position, 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.
6. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred in connection with any Proceeding by or on behalf of Indemnitee by reason of his Company Position within twenty (20) calendar days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding; provided that: (i) no determination has been made that the facts then known would preclude indemnification pursuant to the terms of this Agreement; and (ii) Indemnitee (A) affirms in such written request that he acted in
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good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company (and, in the case of a criminal Proceeding, that he had no reasonable cause to believe his conduct was unlawful), (B) undertakes in such written request to repay such amount to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified against such Expenses and (C) provides appropriate supporting documentation for the Expenses for which he is seeking indemnification. Any advances and undertakings to repay pursuant to this Section 6 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 6 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby expressly agrees to reimburse the Company) within thirty (30) days of such determination for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (and as to which all rights of appeal therefrom have been exhausted or lapsed).
7. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification under this Agreement (including, without limitation, the advancement of Expenses and contribution by the Company), Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent 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 Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made: (i) by Independent Counsel, if requested by Indemnitee with its written request for indemnification; or (ii) if no request is made by the Indemnitee for a determination by Independent Counsel, (A) by the Board (or the Board of Directors of the resulting, continuing or surviving entity following a Change of Control), by a majority vote of a quorum consisting of Disinterested Directors, (B) if such a quorum is not obtainable or if such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board (or the Board of Directors of the resulting, continuing or surviving entity following a Change of Control), a copy of which shall be delivered to the Indemnitee, or (C) if a quorum of Disinterested Directors so directs, by the stockholders of the Company.
(c) In the event the determination of entitlement to indemnification or advancement of Expenses is to be made by Independent Counsel at the request of the Indemnitee, the Independent Counsel shall be selected by the Board, unless there shall have occurred, within two (2) years prior to the date of the commencement of the Proceeding with respect to which indemnification or advancement of Expenses is claimed, a Change of Control, in which case the Independent Counsel shall be selected by the Indemnitee, unless the Indemnitee shall request that such selection be made
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by the Board. Indemnitee or the Company, as the case may be, may, within ten (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 so selected does not meet the criteria of “Independent Counsel” as defined in Section 1, 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 written objection is made and substantiated, 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 Indemnitee of a written request for indemnification pursuant to Section 7(a), no Independent Counsel shall have been selected without objection, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’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 7(b). The Company shall pay any and all reasonable fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 7(b), and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 7(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 Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to rebut this presumption shall have the burden of proof.
(e) Indemnitee shall be deemed to have acted in good faith if his action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers or other employees of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on 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. The parties acknowledge and agree that the foregoing does not represent an exclusive list of the means by which Indemnitee may be deemed to have acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company. In addition, the knowledge 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.
(f) If the person, persons or entity empowered or selected under Section 7 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) 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 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, in light of the context in which it was made, not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that (A) such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) 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 or information relating thereto and (B) the foregoing provisions of this Section 7(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 7(b) and (1)
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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 at such meeting, or (2) a special meeting of stockholders is called within fifteen (15) days after such receipt for the 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 at such meeting.
(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure, available to Indemnitee without undue effort or expense 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 attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(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 Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone seeking to rebut this presumption shall have the burden of proof.
8. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 7 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification is made pursuant to Section 7(b) within ninety (90) days after receipt by the Company of the written request for indemnification, or (iv) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 7, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 8(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 8 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b).
(c) If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
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judicial proceeding commenced pursuant to this Section 8, absent a prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 8, 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 (but subject to the same conditions as are set forth in Section 6 with regard to the advancement of Expenses), any and all expenses (of the types described in the definition of Expenses in Section 1) actually and reasonably incurred by him in connection with such judicial adjudication.
(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 8 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.
9. Nonexclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation of the Company (as may be amended or restated from time to time), the Bylaws, 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 Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Company Position prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under this Agreement, it is the intent of the parties 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.
(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 Enterprise, 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 director, officer, employee, agent or fiduciary under such policy or policies.
(c) Except as provided in the last sentence of this Section 9(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 and take all action reasonably necessary to secure such rights, including execution of such documents as are reasonably necessary to enable the Company to bring suit to enforce such rights. Notwithstanding the foregoing, no right of recovery of Indemnitee pursuant to any (i) director liability insurance policy that covers Indemnitee and is purchased separately by Indemnitee, by any fund or other entity of which Indemnitee is a partner, member or stockholder or that employs Indemnitee or by any of their respective affiliates or (ii) indemnification from any fund or other entity of which Indemnitee is a partner, member or stockholder or that employs Indemnitee or from any of its affiliates shall be subject to subrogation under this Section 9(c).
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(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such amount under any insurance policy, contract, agreement or otherwise.
10. Mutual Acknowledgment. The Company and Indemnitee acknowledge that, in certain instances, Federal law or applicable public policy (pursuant to the immediately following sentence) may prohibit the Company from indemnifying its directors, officers, employees, controlling persons, fiduciaries or other agents or affiliates under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s rights under public policy to indemnify Indemnitee.
11. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director, officer or member of the executive committee of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of any other Enterprise) and shall continue thereafter if and while Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 8) by reason of his Company Position, whether or not he is acting or serving in any such capacity at the time of initiation of the Proceeding, while the Proceeding is pending or at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including 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. Exceptions. Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify the Indemnitee in respect of any intentional malfeasance by the Indemnitee or any act undertaken by the Indemnitee where the Indemnitee did not in good faith believe the Indemnitee was acting in the best interests of the Company, or for any other acts, omissions or transactions from which the Indemnitee may not be relieved of liability under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to any Proceeding initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to a Proceeding to establish or enforce a right to indemnity under any agreement or insurance policy or under the Company’s certificate of incorporation or Bylaws now or hereafter in effect relating to indemnification, (ii) in specific cases if the Board has approved the initiation or bringing of such Proceeding, or (iii) as otherwise required under Section 145 of the DGCL, regardless of whether such Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee with respect to any (i) Proceeding instituted by Indemnitee as contemplated by Section 12(b)(i) or (ii) proceeding instituted by Indemnitee under Section 8 to enforce its rights under this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or
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(d) Claims Under Section 16(b). To indemnify Indemnitee for any Expenses and disgorgement of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Exchange Act or any similar successor statute.
13. Enforcement.
(a) The Company expressly (i) confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or member of the executive committee of the Company and (ii) acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or member of the executive committee 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. Severability. If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement 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; and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement 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. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable law. 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.
15. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both parties. 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.
16. Notice By Indemnitee. Indemnitee agrees 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 that may be subject to indemnification hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
17. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and received by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to the address set forth below Indemnitee’s signature hereto.
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(b) If to the Company, to:
Targacept, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000-0000
Attention: Chief Financial Officer
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18. Counterparts. This Agreement may be executed in two counterparts, each of which shall for all purposes be deemed to be an original and both 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.
19. 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.
20. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the principles of conflicts of laws thereof.
21. Gender. Use of the masculine pronoun herein shall be deemed to include also the corresponding feminine pronoun.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.
COMPANY:
TARGACEPT, INC.
By:
Name:
Title:
INDEMNITEE:
Name:
Address:
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