AGREEMENT OF INDEMNIFICATION OF DIRECTORS
INDEMNITY AGREEMENT, made and executed this 25th day of April, 1997, by and
between Advanced UroScience, Inc., a Minnesota corporation (the "Company"), and
NAME ("Indemnitee");
BACKGROUND
The Company is aware that, in order to induce highly competent persons to
serve the Company as Directors or in other capacities, the Company must provide
such persons with adequate protection through insurance and indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the Company. The difficulty of obtaining
adequate directors' and officers' liability insurance in the current market has
increased the difficulty of attracting and retaining such persons. The Board of
Directors of the Company has determined that (1) it is essential to the best
interests of the Company's stockholders that the Company act to assure such
persons that there will be increased certainty of such protection in the future,
and that (2) it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will continue to serve the Company free
from undue concern that they will not be so indemnified. The Indemnitee is
willing to serve, continue to serve, and take on additional service for or on
behalf of the Company on the condition that he be so indemnified;
NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Indemnitee do hereby agree as follows:
1. SERVICE BY THE INDEMNITEE. The Indemnitee will serve as a Director or
officer of the Company faithfully and will discharge his duties and
responsibilities to the best of his ability so long as he is duly elected or
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company and the Minnesota Business Corporation Act or until his
earlier death, resignation or removal. The Indemnitee may at any time and for
any reason resign from such position (subject to any other contractual
obligation or other obligation imposed by operation of law), in which event the
Company shall have no obligation under this Agreement to continue the Indemnitee
in any such position. Nothing in this Agreement shall confer upon the
Indemnitee the right to continue.
2. INDEMNIFICATION. The Company shall indemnify the Indemnitee to the
fullest extent permitted by the Minnesota Business Corporation Act or other
applicable law, as in effect from time to time. Without diminishing the scope
of the indemnification provided by this Section, the rights of indemnification
of the Indemnitee provided hereunder shall
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include, but shall not be limited to, those rights hereinafter set forth, except
that no indemnification shall be paid to the Indemnitee:
(a) on account of any suit in which judgment is rendered against the
Indemnitee for disgorgement of profits made from the purchase or sale by
the Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any federal, state or local statutory law;
(b) on account of conduct of the Indemnitee which is finally adjudged
by a court of competent jurisdiction to have been knowingly fraudulent or
to constitute willful misconduct;
(c) in any circumstance where such indemnification is expressly
prohibited by applicable law;
(d) with respect to liability for which payment is actually made to
the Indemnitee under a valid and collectible insurance policy or under a
valid and enforceable indemnity clause, bylaw or agreement (other than this
Agreement), except in respect of any liability in excess of payment under
such insurance, clause, bylaw or agreement;
(e) if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful (and, in this
respect, both the Company and the Indemnitee have been advised that it is
the position of the Securities and Exchange Commission that indemnification
for liabilities arising under the federal securities laws is against public
policy and is, therefore, unenforceable, and that claims for
indemnification should be submitted to the appropriate court for
adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
the Indemnitee, or any proceeding by the Indemnitee against the Company or
its directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the Company, (iii)
such indemnification is provided by the Company in its sole discretion,
pursuant to the powers vested in the Company under applicable law, or (iv)
except as provided in Sections 10 and 13 hereof.
3. ACTIONS OR PROCEEDINGS OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE
COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this Section if he 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 or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent or fiduciary of any
other entity, including, but not limited to, another corporation, partnership,
joint venture or trust, or by reason of any act or omission by him in any such
capacity. Pursuant to this Section, the Indemnitee shall be indemnified against
all expenses (including attorneys' fees), costs,
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judgments, penalties, fines and amounts paid in settlement which were actually
and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), 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 action or proceeding, if he had no reasonable cause to believe his
conduct was unlawful.
4. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall be
entitled to the indemnification rights provided in this Section if he is a
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture or trust, or by
reason of any act or omission by him in any such capacity. Pursuant to this
Section, the Indemnitee shall be indemnified against all expenses (including
attorneys' fees), costs and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding (including,
but not limited to, the investigation, defense or appeal thereof), if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
be the best interests of the Company; provided, however, that no such
indemnification shall be made in respect of any claim, issue, or matter as to
which applicable law expressly prohibits such indemnification by reason of any
adjudication of liability of the Indemnitee to the Company, unless and only to
the extent that a court of the Fourth Judicial District of Minnesota or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, the Indemnitee is fairly and reasonably entitled to indemnify for
such expenses and costs which such court shall deem proper.
5. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Agreement, to the extent that the
Indemnitee has served on behalf of the Company as a witness or other participant
in any claim, action or proceeding, or has been successful, on the merits or
otherwise, in defense of any action, suit or proceeding referred to in Sections
3 and 4 hereof, or in defense of any claim, issue or matter therein, including,
but not limited to, the dismissal of any action without prejudice, he shall be
indemnified against all costs, charges and expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
6. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorneys' fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 3 or 4
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hereof, but is not entitled to indemnification for the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion of such
expenses (including reasonable attorneys' fees), costs, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him to
which the Indemnitee is entitled. Without limiting the generality of the
foregoing, if the action suit, and so forth, is brought against the Indemnitee
in his capacity as a director, officer, or employee and a shareholder, the
presumption shall be that recovery is sought by reason of the Indemnitee's
status as a director, officer of employee.
7. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written request
by the Indemnitee for indemnification pursuant to Section 3 or 4 hereof, the
entitlement of the Indemnitee to indemnification pursuant to the terms of this
Agreement shall be determined by the following person or persons, who shall be
empowered to make such determination: (a) the Board of Directors of the Company,
by a majority vote of a quorum consisting of Disinterested Directors (as
hereinafter defined); or (b) if such a quorum is not obtainable or, even if
obtainable, if the Board of Directors, by the majority vote of Disinterested
Directors, so directs, by Independent Counsel (as hereinafter defined) in a
written opinion to the Board of Directors, a copy of which shall be delivered to
the Indemnitee. Such Independent Counsel shall be selected by the Board of
Directors and approved by the Indemnitee. Upon failure of the Board to so
select, or upon failure of the Indemnitee to so approve such Independent
Counsel, such Independent Counsel shall be selected by the Chief Judge of the
District Court of the Fourth Judicial District of Minnesota or such other person
as the Chief Judge shall designate to make such selection. Such determination
of entitlement to indemnification shall be made not later than 45 days after
receipt by the Company of a written request for indemnification. Such request
shall include documentation or information which is necessary for such
determination and which is reasonably available to the Indemnitee. Any costs or
expenses (including attorneys' fees) incurred by the Indemnitee in connection
with his request for indemnification hereunder shall be borne by the Company.
The Company hereby indemnifies and agrees to hold the Indemnitee harmless
therefrom irrespective of the outcome of the determination of the Indemnitee's
entitlement to indemnification. If the person making such determination shall
determine that the Indemnitee is entitled to indemnification as part (but not
all) of the application for indemnification, such person shall reasonably
prorate such partial indemnification among such claims, issues or matters.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of the
Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors, or such other person
or persons as are empowered to make the determination pursuant to Section 7,
that the Indemnitee has made such request for determination. Upon making such
request for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in the
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
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requested indemnification within 45 days after receipt by the Company of such
request, the requisited determination of entitlement to indemnification shall be
deemed to have been made and the Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 3 or 4 hereof by judgment, order, settlement or
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself: (a) create a presumption that the 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, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his conduct
was unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification, except as may be provided herein.
9. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and costs
actually incurred by the Indemnitee (including attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding,
if so requested by the Indemnitee, within 20 days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances. The Indemnitee may submit such statements from time to time. The
Indemnitee's entitlement to such expenses shall include those incurred in
connection with any proceeding by the Indemnitee seeking an adjudication or
award in arbitration pursuant to this Agreement. Such statement or statements
shall reasonably evidence the expenses and costs incurred by him in connection
therewith and shall include or be accompanied by an undertaking by or on behalf
of the Indemnitee to repay such amount if it is ultimately determined that the
Indemnitee is not entitled to be indemnified against such expenses and costs by
the Company pursuant to this Agreement or otherwise.
10. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO INDEMNIFY
OR TO ADVANCE EXPENSES. In the event that a determination is made that the
Indemnitee is not entitled to indemnification hereunder or if payment has not
been timely made following a determination of entitlement to indemnification
pursuant to Sections 7 and 8, or if expenses are not advanced pursuant to
Section 9, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Minnesota or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Indemnitee may, at his option, seek an award in arbitration
to be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association, such award to be made within 60 days following the
filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made DE NOVO and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or
deemed to have been made pursuant to the terms of Section 7 or Section 8 hereof
that the Indemnitee is entitled to indemnification, the Company shall be bound
by such determination and shall be precluded from asserting that such
determination has not been made or that the procedure by which
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such determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court or before any such arbitrator that
the Company is bound by all the provisions of this Agreement and is precluded
from making any assertions to the contrary. If the court or arbitrator shall
determine that the Indemnitee is entitled to any indemnification hereunder, the
Company shall pay all reasonable expenses (including attorneys' fees) and costs
actually incurred by the Indemnitee in connection with such adjudication or
award in arbitration (including, but not limited to, any appellate proceedings).
11. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by the
Indemnitee 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 in writing 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. Notwithstanding any other provision of this Agreement, with respect
to any such action, suit or proceeding as to which the Indemnitee gives notice
to the Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 11(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to
the Indemnitee of its election to so assume the defense thereof, the
Company shall 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 own 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
the action, in each of which cases the fees and expenses of 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 reached the
conclusion provided for in clause (ii) above.
(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
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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 their consent to any proposed
settlement.
12. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and advancement
of expenses (including attorneys' fees) and costs provided by this Agreement
shall not be deemed exclusive of any other rights to which the Indemnitee may
now or in the future be entitled under any provision of the Bylaws of the
Company, any provision of the Articles of Incorporation of the Company, any vote
of stockholders or Disinterested Directors, any provision of law or otherwise.
13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the event
that the Indemnitee is subject to or intervenes in any proceeding in which the
validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee, if he prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual expenses for attorneys'
fees and disbursements reasonably incurred by him.
14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationship described in Sections 3 and
4 of this Agreement, and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Indemnitee may be
subject by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, including, but not limited to, another corporation, partnership, joint
venture or trust, or by reason of any act or omission by him in any such
capacity. The indemnification provided under this Agreement shall continue as
to the Indemnitee even though he may have ceased to be a director or officer of
the Company. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Indemnitee and his
spouse, successors, assigns, heirs, devisees, executors, administrators or other
legal representatives.
15. SEVERABILITY. If any provision or provisions of this Agreement shall
be held invalid, illegal or unenforceable for any reason whatsoever, (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, but not limited to, all portions of any Sections of this
Agreement containing any such provision held to be invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby, and (b) to
the fullest extent possible, the provisions of this Agreement (including, but
not limited to, all portions of any paragraph of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall
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be construed so as to give effect to the intent manifest by the provision held
invalid, illegal or unenforceable.
16. 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 shall
be required to be produced to evidence the existence of this Agreement.
17. CAPTIONS. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
18. DEFINITIONS. For purposes of this Agreement:
"DISINTERESTED DIRECTOR" shall mean a Director of the Company who is not or
was not a party to the action, suit, investigation or proceeding in respect of
which indemnification is being sought by the Indemnitee.
"INDEPENDENT COUNSEL" shall mean a law firm or a member of a law firm that
neither is presently nor in the past five years has been retained to represent:
(i) the Company or the Indemnitee in any matter material to either such party,
or (ii) any other party to the action, suit, investigation or 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 the Indemnitee in an
action to determine the Indemnitee's right to indemnification under this
Agreement.
19. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both parties
hereto. 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.
20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand with receipt acknowledged by the party to whom said notice or
other communication shall have been directed or if (ii) mailed by certified or
registered mail, return receipt requested, with postage prepaid, on the date
shown on the return receipt:
(a) If to the Indemnitee to:
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(b) If to the Company, to: Advanced UroScience
0000 Xxxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000
or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
21. GOVERNING LAW. The parties hereto agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Minnesota, applied without giving effect to any conflicts-of-law
principles.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ADVANCED UROSCIENCE, INC.
By
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Its
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INDEMNITEE:
By
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Its
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