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EXHIBIT 10.4
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into as of ________________, 1999,
by and between NOVEN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), and _______________________ (the "Indemnitee").
PRELIMINARY STATEMENTS
WHEREAS, the Company desires to retain the services of the Indemnitee
as a director, officer, employee and/or agent of the Company;
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware (the "Delaware Law") provides a non-exclusive statutory basis for the
indemnification of directors, officers, employees and agents of a Delaware
corporation and authorizes agreements between the Company and its directors,
officers, employees and agents with respect to indemnification of such
individuals.
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons so that they will
serve or continue to serve the Company free from undue concern that they will
not be so indemnified, and the Indemnitee is willing to serve, continue to serve
and to take on additional service for or on behalf of the Company on the
condition that he be so indemnified; and
WHEREAS, in order to induce the Indemnitee to serve or to continue to
serve as a director, officer, employee and/or agent of the Company and/or a
subsidiary of the Company, the Company has determined and agreed to enter into
this agreement with the Indemnitee, and the Company and the Indemnitee agree as
follows:
1. INDEMNIFICATION OF INDEMNITEE. The Company hereby agrees to hold
harmless and indemnify the Indemnitee to the fullest extent authorized or
permitted by the provisions of the Delaware Law, or by any amendment thereof or
other statutory provision authorizing or permitting such indemnification adopted
after the date hereof that has the effect of broadening (but not narrowing) the
scope of indemnification provided under Delaware Law as it exists as of the date
hereof.
2. ADDITIONAL INDEMNIFICATION. In addition to any other indemnification
to which the Indemnitee may be entitled pursuant to Delaware Law, the Company's
Articles of Incorporation (the "Articles") or Bylaws (the "Bylaws"), or
otherwise, and subject only to the limitation set forth in Section 3 hereof, the
Company hereby further agrees to hold harmless and indemnify the Indemnitee
against any and all costs and expenses (including trial, appellate and other
attorneys' fees), judgments, fines, penalties and amounts paid in settlement,
actually and reasonably incurred by the Indemnitee in connection with any
threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action by or in
the right of the Company or a corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise or by or in the right of any other
person) to which the Indemnitee is, was, or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that the Indemnitee is,
was, or at any time becomes a director, officer, employee or agent of the
Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership,
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joint venture, trust, employee benefit plan or other enterprise. Notwithstanding
any other provision of this Agreement, the Company shall pay and reimburse all
expenses incurred by Indemnitee in connection with his appearance as a witness
or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.
3. LIMITATIONS ON ADDITIONAL INDEMNIFICATION. No indemnification
pursuant to Section 2 hereof shall be paid by the Company if a judgment (after
exhaustion of all appeals) or other final adjudication determines that the
Indemnitee's actions, or omissions to act, were material to the cause of action
so adjudicated and constitute:
a. a violation of criminal law, unless the Indemnitee had
reasonable cause to believe his conduct was lawful; or had no reasonable cause
to believe his conduct was unlawful;
b. in the case of a director, a circumstance under which the
liability provisions of Section 174 of the General Corporation Law of the State
of Delaware are applicable; or
c. willful misconduct or a conscious disregard for the best
interests of the Company in a proceeding by or in the right of the Company to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder of the Company.
4. DISBURSEMENT/REPAYMENT OF EXPENSES. In addition to the prompt
payment of any indemnification to which the Indemnitee may be entitled, upon the
demand of the Indemnitee, the Company shall promptly (and in any event within
five (5) business days after written demand therefor) advance to or reimburse
the Indemnitee for all reasonable expenses (including, without limitation,
trial, appellate and other attorneys' fees, court costs, judgments, fines,
penalties, amounts paid in settlement and other payments) that the Indemnitee
may incur in responding to, investigating, defending, settling or appealing any
claim, action, suit or proceeding for which it reasonably appears that the
Indemnitee may be entitled to indemnification from the Company, either pursuant
to this Agreement, Delaware Law, the Articles, the Bylaws or otherwise. The
Indemnitee agrees to reimburse the Company for all such expenses in the event,
and only to the extent, that it shall be ultimately determined that the
Indemnitee is not entitled to be indemnified by the Company for such expenses
under the provisions of Section 3 of this Agreement. Such undertaking to
reimburse the Company for amounts advanced, if it is ultimately determined that
the Indemnitee is not entitled to be indemnified by the Company, is an unlimited
general, unsecured and interest free obligation of the Indemnitee.
5. INDEMNIFICATION PROCEDURES.
a. PAYMENT/DETERMINATION OF INDEMNIFICATION. Upon any request
from the Indemnitee for indemnification from the Company, whether pursuant to
this Agreement, Delaware Law, the Articles, the Bylaws or otherwise, the Company
shall promptly pay the full amount of such requested indemnification. If the
Company's Board of Directors (the "Board") reasonably believes that all or any
portion of such indemnification pursuant to this Agreement is prohibited by
Section 3 hereof, the Company shall in any event promptly pay the amount of such
indemnification, if any, that may reasonably then be paid and shall promptly
make or cause to be made a determination (the
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"Determination") of whether the payment of the balance is limited by Section 3
hereof. Such Determination shall be made in the following order or preference:
(i) by the Board of Directors by majority vote or
consent of a quorum consisting of directors who are not, at the time of the
Determination, named parties to such action, suit or proceeding ("Disinterested
Directors"); or
(ii) if such a quorum of Disinterested Directors
cannot be obtained by majority vote or consent of a committee duly designated by
the Board (in which designation all directors, whether or not Disinterested
Directors, may participate) consisting solely of two or more Disinterested
Directors; or
(iii) if such a committee cannot be established, by
the opinion of independent outside legal counsel employed by the Company; or
(iv) if such legal opinion cannot be obtained, by a
majority vote or consent of a quorum of shareholders who are not parties to such
action, suit or proceedings or, if no such quorum is obtainable, by a majority
vote of such shareholders.
b. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. In making a
Determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making the Determination shall presume that
Indemnitee is entitled to indemnification under this Agreement and the Company
shall have the burden of proof to overcome that presumption in connection with
the making by any person, persons or entity of any Determination contrary to
that presumption. The termination of any claim, action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, be determinative of or create a
presumption that the Indemnitee is not entitled to indemnification or
reimbursement of expenses hereunder or otherwise.
c. RELIANCE AS SAFE HARBOR. For purposes of any Determination
hereunder, the Indemnitee shall 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 or other enterprise; or with respect to any criminal action or
proceeding, to have had reasonable cause to believe his conduct was lawful, or
no reasonable cause to believe his conduct was unlawful; if his action is based
on information, opinions, reports, or statements, including financial statements
and other financial data, prepared or presented by one or more officers or
employees of the Company whom the Director reasonably believes to be reliable
and competent in such matters presented; legal counsel, public accountants, or
other persons as to matters the Director reasonably believes are within the
persons' professional or expert competence; or a committee of the Board of
Directors of which he is not a member if the Director reasonably believes the
committee merits confidence. The term "or other enterprise" as used in this
Section 5(c) shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise of which the Indemnitee is or
was serving at the request of the Company as a director, officer, partner,
trustee, employee or agent. The provisions of this Section 5(c) shall not be
deemed to
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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 herein.
d. SUCCESS ON MERITS OR OTHERWISE. Notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described herein, or in defense of any claim, issue or matter
therein, he shall be indemnified against all costs and expenses (including
trial, appellate and other attorneys' fees) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal thereof.
For purposes of this Section 5(d), the term "successful on the merits or
otherwise" shall include, but not be limited to, (i) any termination,
withdrawal, or dismissal (with or without prejudice) of any claim, action, suit
or proceeding against the Indemnitee without any express finding of liability or
guilt against him, (ii) the expiration of 90 days after the making of any claim
or threat of an action, suit or proceeding without the institution of the same
and without any promise of payment made to induce a settlement, or (iii) the
settlement of any action, suit or proceeding pursuant to which the Indemnitee
pays less than $15,000 in settlement.
e. PARTIAL INDEMNIFICATION OR REIMBURSEMENT. If the Indemnitee
is entitled under any provision of this Agreement to indemnification and/or
reimbursement by the Company for some or a portion of the costs and expenses
(including trial, appellate and other attorneys' fees), judgments, fines,
penalties or amounts paid in settlement by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any action specified herein, but
not, however, for the total amount thereof, the Company shall nevertheless
indemnify and/or reimburse the Indemnitee for the portion thereof to which the
Indemnitee is entitled. The party or parties making the Determination shall
determine the portion (if less than all) of such claims, damages, expenses
(including trial, appellate and other attorneys' fees), judgments, fines or
amounts paid in settlement for which the Indemnitee is entitled to
indemnification and/or reimbursement under this Agreement.
f. COSTS. All costs of making any Determination required by
this Section 5 shall be borne solely by the Company, including, but not limited
to, the costs of legal counsel, proxy solicitations and judicial determinations.
The Company shall also be solely responsible for paying (i) all reasonable
expenses incurred by the Indemnitee to enforce this Agreement including trial,
appellate and other attorneys' fees and costs; and (ii) all costs of defending
any suits or proceedings challenging payments to the Indemnitee under this
Agreement including trial, appellate and other attorneys' fees and costs.
g. TIMING OF THE DETERMINATION. The Company shall use its best
efforts to make the Determination contemplated by this Section 5 promptly, but
in all events within the following time periods:
i. if the Determination is to be made by the Board
or a committee thereof, such Determination shall be made not later than 30 days
after a written request for a Determination (a "Request") is delivered to the
Company by the Indemnitee;
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ii. if the Determination is to be made by the
Company's outside independent legal counsel, such Determination shall be made
not later than 60 days after a Request is delivered to the Company by the
Indemnitee; and
iii. if the Determination is to be made by the
Company's shareholders, such Determination shall be made not later than 90 days
after a Request is delivered to the Company by the Indemnitee.
The failure to make a Determination within the above-specified time period shall
constitute a Determination that full indemnification is not limited or
prohibited by Section 3 hereof.
h. SHAREHOLDER VOTE ON DETERMINATION. In connection with each
meeting at which a shareholder Determination will be made, the Company shall
solicit proxies that expressly include a proposal to indemnify or reimburse the
Indemnitee. Subject to the fiduciary duties of its members under applicable law,
the Board will not recommend against Indemnification or reimbursement in any
proxy statement relating to the proposal to indemnify or reimburse the
Indemnitee.
i. RIGHT OF INDEMNITEE TO APPEAL ON ADVERSE DETERMINATION BY
BOARD OR COMMITTEE. If a Determination is made by the Board or a committee
thereof that all or any portion of a request for indemnification pursuant to
this Agreement is prohibited by Section 3 hereof, then upon the written request
of the Indemnitee, the Company shall cause a new Determination to be made by the
Company's shareholders in accordance with Section 5a(iv), at the next regular or
special meeting of shareholders. Such Determination by the Company's
shareholders shall be binding and conclusive for all purposes of this Agreement,
but shall not preclude the Indemnitee from seeking court-ordered indemnification
or reimbursement pursuant to any provision of the Delaware Law or otherwise.
j. RIGHT OF INDEMNITEE TO SELECT FORUM FOR INDEMNIFICATION. If
at any time subsequent to the date of this Agreement, "Continuing Directors" (as
defined below) do not constitute a majority of the members of the Board, or
there is otherwise a change in control of the Company (as contemplated by Item
403(c) of Securities and Exchange Commission Regulation S-K), then upon the
request of the Indemnitee, the Company shall cause the Determination required by
this Section 5 to be made by special legal counsel designated by the Indemnitee
and approved by the Board (which approval shall not be unreasonably withheld),
which counsel shall be deemed to satisfy the requirements of Section 5(a)(iii)
hereof. If none of the legal counsel selected by the Indemnitee are willing
and/or able to make the Determination, then the Company shall cause the
Determination to be made by a majority vote or consent of a Board committee
consisting solely of Continuing Directors. For purposes of this Agreement, a
"Continuing Director" means either a member of the Board at the date of this
Agreement or a person nominated to serve as a member of the Board by a majority
of the then Continuing Directors.
k. ACCESS BY THE INDEMNITEE TO DETERMINATION. The Company
shall afford to the Indemnitee and his representative ample opportunity to
present evidence of the facts upon which the Indemnitee relies for
indemnification or reimbursement, together with other information relating to
any
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requested Determination. The Company shall also afford the Indemnitee the
reasonable opportunity to include such evidence and information in any Company
proxy statement relating to a shareholder Determination.
6. CONTRIBUTION.
a. If the indemnification provided in Sections 1 and 2 hereof
is unavailable and may not be paid to the Indemnitee for any reason other than
those set forth in Section 3 hereof, then in respect of any threatened, pending
or completed action, suit or proceeding in which the Company is jointly liable
with the Indemnitee (or would be joined in such action, suit or proceeding), the
Company shall contribute to the amount of expenses, judgments, fines and
settlements paid or payable by the Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the Indemnitee on the other hand from the transaction from which
such action, suit or proceeding arose, and (ii) the relative fault of the
Company on the one hand and of the Indemnitee on the other in connection with
the events that resulted in such expenses, judgments, fines or settlement
amounts, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Indemnitee on the other shall be
determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or any other method of allocation that does not take into account the foregoing
equitable considerations.
b. The determination as to the amount of the contribution, if
any, shall be made by:
i. a court of competent jurisdiction upon the
application of both the Indemnitee and the Company (if an action or suit had
been brought in, and final determination had been rendered by such court);
ii. the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding;
or
iii. outside independent legal counsel of the
Company, if a quorum is not obtainable for purpose of (ii) above, or, even if
obtainable, a quorum of Disinterested Directors so directs.
7. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt of notice
of the commencement of any action, suit or proceeding, the Indemnitee will, if a
claim in respect thereof is to be made against the Company under this Agreement,
notify the Company of the commencement thereof, but the omission to so notify
the Company will not relieve the Company from any liability that it may have to
the Indemnitee otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which the Indemnitee so notifies the Company:
a. the Company will be entitled to participate therein at
its own expense;
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b. except as otherwise provided below, the Company may assume
the defense thereof, with counsel satisfactory to the Indemnitee. After notice
from the Company to the Indemnitee of its election to assume the defense, the
Company will not be liable to the Indemnitee under this Agreement for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof, other than reasonable costs of investigation or as otherwise
provided below. The Indemnitee shall have the right to employ his counsel in
such action, suit or proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of the Indemnitee unless: (i) the employment of counsel
by the Indemnitee has been authorized by the Company; (ii) the Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of the defense of such action; or
(iii) the Company shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of the Indemnitee's
counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company or as to which the Indemnitee shall have come to the
conclusion provided for in (ii) above; and
c. the Company shall not be liable to indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold its or his consent to any proposed
settlement.
8. LIABILITY INSURANCE. So long as the Indemnitee shall continue to
serve as a director or officer of the Company (or shall continue at the request
of the Company to serve as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise), the Company will use its
best efforts to purchase and maintain in effect for the benefit of the
Indemnitee one or more valid, binding and enforceable policy or policies of D&O
Insurance providing coverage within limits determined by the Board in its sole
discretion. Notwithstanding the foregoing, the Company shall not be required to
purchase or maintain such insurance policy, if, in the sole discretion of the
Board (i) such insurance is not reasonably available; (ii) the premium cost for
such insurance is disproportionate to the amount of coverage; or (iii) the
coverage provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance.
9. DISCLOSURE OF PAYMENTS. Except as expressly required by law, neither
party shall disclose any payments under this Agreement unless prior approval of
the other party is obtained. Any payments to the Indemnitee that must be
disclosed shall, unless otherwise required by law, be described only in Company
proxy or information statements relating to special and/or annual meetings of
the Company's shareholders, and the Company shall afford the Indemnitee the
reasonable opportunity to review all such disclosures and, if requested, to
explain in such statement any mitigating circumstances regarding the events
reported.
10. CONTINUATION OF OBLIGATIONS. All agreements and obligations of the
Company contained herein shall continue during the period the Indemnitee is a
director, officer, employee or
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agent of the Company (or is serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise), and shall continue thereafter for so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that the Indemnitee has ceased to serve in any such
capacity due to his resignation, removal by vote of directors or shareholders,
termination, death, disability or otherwise.
11. 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 the Indemnitee to serve or to continue to serve as a director,
officer, employee and/or agent of the Company and/or a subsidiary of the
Company, and acknowledges that the Indemnitee is relying upon this Agreement in
agreeing to serve or to continue to serve in such capacity.
b. In the event the Indemnitee is required to bring any action
to enforce his rights and to collect monies due under this Agreement and is
successful in such action, the Company shall reimburse the Indemnitee for all of
the Indemnitee's reasonable fees and expenses in bringing and pursuing such
action, including reasonable attorney's fees (including trial, appellate and
other attorney's fees), court costs and other related expenses.
12. MISCELLANEOUS.
a. COOPERATION AND INTENT. The Company shall cooperate in good
faith with the Indemnitee and use its best efforts to ensure that the Indemnitee
is indemnified and/or reimbursed for expenses as described herein to the fullest
extent permitted under the provisions of this Agreement.
b. NONEXCLUSIVITY; SUBROGATION; ENTIRE AGREEMENT. The rights
of indemnification and reimbursement provided in this Agreement shall be in
addition to any rights by which the Indemnitee may otherwise be entitled by
Delaware Law, the Articles, the Bylaws, a vote of the Company's shareholders, or
otherwise. 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
the Indemnitee, who shall execute all papers required and take all action
necessary to secure such rights, including the execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights. The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that the Indemnitee has
otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise. This Agreement constitutes the entire agreement between
the Company and the Indemnitee with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
both written and oral, between the parties hereto with respect to such subject
matter (the "Prior Agreements"); provided, however, that if this Agreement shall
ever be held void or unenforceable for any reason whatsoever, and is not
reformed pursuant to Section 12(d) hereof, then (i) this Agreement shall not be
deemed to have superseded any Prior Agreements; (ii) all of such Prior
Agreements shall be deemed to be in full force and effect notwithstanding the
execution of this Agreement; and (iii) the Indemnitee shall be entitled to
maximum indemnification benefits provided
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under Delaware Law, the Articles, the Bylaws, a vote of Company's shareholders,
or any Prior Agreements.
c. EFFECTIVE DATE. The provisions of this Agreement shall
cover claims, actions, suits, and proceedings whether now pending or hereafter
commenced and shall be retroactive to cover acts or omissions or alleged acts or
omissions that heretofore have taken place.
d. SEVERABILITY; REFORMATION. Each of the provisions of this
Agreement is a separate and distinct agreement and independent of the others, so
that if any provision hereof shall be held to be invalid or unenforceable in
whole or in part for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof. In the
event that all or any portion of this Agreement is ever held void or
unenforceable by a court of competent jurisdiction, then the parties hereto
hereby expressly authorize such court to modify any provision(s) held void or
unenforceable to the extent, and only to the extent, necessary to render it
valid and enforceable.
e. 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 receipted for by the party to whom said
notice or other communication is directed, or (ii) mailed by certified or
registered mail, postage prepaid, on the third business day after the date on
which it is so mailed:
If to the Indemnitee: To the address set forth on the signature page hereof.
If to the Company: Noven Pharmaceuticals, Inc.
00000 X.X. 000 Xxxxxx
Xxxxx, XX 00000
or to such other address as may have been furnished by either party to the
other.
f. AMENDMENTS OR MODIFICATION. This Agreement may not be
amended or modified in any way except by a written instrument executed by all of
the parties.
g. GOVERNING LAW. This Agreement shall be governed by,
interpreted and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflicts of law thereof.
h. SUCCESSOR AND ASSIGNS. This Agreement shall be binding,
upon the Indemnitee and the Company, its successors and assigns, and shall inure
to the benefit of the Indemnitee, his heirs, personal representatives,
successors and assigns and to the benefit of the Company, its successors and
assigns.
i. 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.
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j. HEADINGS. The headings of the sections 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
NOVEN PHARMACEUTICALS, INC.
BY:
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Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
THE INDEMNITEE:
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Address:
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