FORM OF INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made and entered into as of the ___
day of _______________________, by and between _____________ ("Indemnitee") and
Epitope, Inc., an Oregon corporation (the "Company").
RECITALS
A. The Company has recognized the difficulty that publicly held
corporations are having in attracting and retaining qualified directors,
officers and key employees as a result of the increasing risk of claims and
actions against them arising out of their association with the Company.
B. Indemnitee is an officer, director and/or key employee of the
Company and/or any of the Company's subsidiaries.
C. Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company and/or any of the Company's
subsidiaries.
D. In view of the mutual desire of the parties that Indemnitee render
valuable services to the Company, the parties have agreed to enter into this
Indemnification Agreement.
THEREFORE IT IS AGREED:
1. Definitions. The following definitions shall apply to this
Agreement:
1.1. "Act" shall be the Oregon Business Corporation Act and
all amendments thereto hereinafter enacted.
1.2. "Expenses" shall include, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals and attorneys'
fees and disbursements and any expenses of establishing a right to
indemnification under this Agreement.
1.3. "Liability" means the obligation to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with respect to an
employee benefit plan, or reasonable Expenses incurred with respect to a
Proceeding.
1.4. "Party" includes an individual who was is or is
threatened to be made a named defendant or respondent in a proceeding.
1.5. "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.
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2. Indemnification. The Company shall indemnify Indemnitee against
Liability and Expenses actually and necessarily incurred by him or her in any
Proceeding in which he or she is made a Party by reason of being or having been
a director, officer or key employee of the Company and/or any of the Company's
subsidiaries, except in relation to matters as to which indemnification is
prohibited by the Act; but such indemnification shall not be deemed exclusive of
any other rights to which Indemnitee may be entitled under any bylaw or
agreement of the Company, general or specific action of the Company's board of
directors, vote of the Company's shareholders or otherwise.
3. Procedure for Indemnification. After the final disposition of any
Proceeding in which Indemnitee may be entitled to indemnification pursuant to
this Agreement, Indemnitee may send to the Company a written request for
indemnification. The Company shall, in accordance with the provisions of the Act
regarding determination and authorization of indemnification, make a finding
whether the indemnification requested is permitted by the laws of the state of
Oregon no later than 60 days following receipt by the Company of such request.
The Company shall cause the indemnification requested to be authorized and paid
unless the Company finds that the indemnification requested is not so permitted.
Indemnitee shall be given an opportunity to be heard and to present evidence in
connection with the consideration of the party or parties determining
Indemnitee's right to indemnification under the Act. If the Company does not
authorize indemnification hereunder, Indemnitee shall have the right to seek
court-oredered indemnification in accordance with the provisions of the Act. In
any such action, neither the making of, nor the failure to make, any finding by
the Company that indemnification of the Indemnitee is proper or not proper in
the circumstances shall be a defense to such action or create a presumption that
the Indemnitee has not met the standard of conduct required by the Act. In
making its determination and in any court proceeding, the Company shall have the
burden of proving that Indemnitee has not met the standard of conduct required
by the Act to entitle Indemnitee to indemnification.
4. Procedure for Advancement of Expenses. The Company shall pay for or
reimburse the reasonable Expenses incurred by Indemnitee as a result of being
Party to a Proceeding promptly upon receipt of a written request for payment of
such Expenses that is in accordance with the requirements of the Act for such
written statements. Such written statement shall also include or be accompanied
by documentation of the Expenses incurred certified true and correct by
Indemnitee. When available, such documentation of expenses shall include copies
of bills or statements evidencing the Expenses incurred. If the requirements of
this Section 4 are met, the Company shall pay the amount requested promptly
notwithstanding the absence of a final disposition of the Proceeding.
5. Partial Indemnity. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses or Liability incurred by Indemnitee in the preparation, investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount thereof, the Company shall indemnify Indemnitee for the portion of such
Expenses or Liability to which Indemnitee is entitled in accordance with this
Agreement.
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6. Insurance. The Company may, but shall not be required to, purchase
and keep in force during the term of this Agreement a policy or policies of
liability insurance on behalf of Indemnitee against Liability and Expenses
incurred in any Proceeding. Nothing herein shall be construed to prohibit
Indemnitee from maintaining his or her own policy of liability insurance.
7. Exclusions. The Company shall not be liable to make any payment
hereunder:
7.1. If it shall be finally adjudicated that such payment is
prohibited by law;
7.2. On account of any Proceeding brought under Section 16(b)
of the Securities Exchange Act of 1934, as such law is amended from time to
time, or under any similar law that replaces Section 16(b), in which judgment is
rendered against Indemnitee for an accounting for profits made from the purchase
or sale by Indemnitee of the securities of the Company;
7.3. For Liability or Expenses in any Proceeding brought by
Indemnitee against the Company unless (I) the Proceeding is brought as a
Proceeding for indemnity under this Agreement, (ii) Indemnitee is successful in
whole or in part in a Proceeding or (iii) the indemnification is included in a
settlement of the Proceeding or is awarded by a court;
7.4. To the extent payment is actually made to Indemnitee
under a valid, enforceable and collectible insurance policy, whether provided by
the Company or by Indemnitee (the "Insurance Policy"), by or out of a fund
created by the Company and under the control of a trustee or otherwise (the
"Fund") or from other sources provided by the Company ("Other Sources"); or
7.5. For amounts paid in settlement of a claim effected
without the Company's prior written consent, which consent shall not be
unreasonably withheld. If Indemnitee shall become obligated or required to pay
any amount that the Company would be obligated to pay hereunder except for the
exclusion in Section 7.4, the Company shall advance such amount to Indemnitee if
payment is not reasonably expected to be made under the Insurance Policy, by the
Fund or from Other Sources prior to the time that Indemnitee must make such
payment, provided, however, that Indemnitee shall immediately pay over to the
Company, from the funds Indemnitee later receives under the Insurance Policy,
from the Fund or from Other Sources, an amount equal to the amount advanced.
8. Defense of Claim. If any Proceeding asserted or commenced against
Indemnitee is also asserted or commenced against the Company, the Company shall
be entitled to participate in the Proceeding at its own expense and, except as
otherwise provided herein below, to the extent that it may wish the Company
shall be entitled to assume the defense thereof. After notice from the Company
to Indemnitee of its election to assume the defense of any such Proceeding,
Indemnitee shall have the right to employ Indemnitee's own
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counsel in such Proceeding, but the Expenses of such counsel incurred after
notice from the Company to Indemnitee of its assumption of the defense thereof
shall be the Expenses of Indemnitee, and the Company may not be obligated to
Indemnitee under this Agreement for any Expenses subsequently incurred by
Indemnitee in connection therewith other than the reasonable costs of
investigation, travel and lodging Expenses arising out of Indemnitee's
participation in the defense of such Proceeding unless (i) otherwise authorized
by the Company, (ii) Indemnitee's counsel shall have reasonably concluded, and
so notified the Company in writing, that there may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense of such
Proceeding or (iii) the Company shall not in fact have employed counsel to
assume the defense of such Proceeding. If the Company may be obligated for some
or all of the Expenses of Indemnitee under this Section 8, the determination of
Indemnitee's entitlement to indemnification shall be made in accordance with
Section 3.
9. Change in Control.
9.1. The Company agrees that, if there is a Change in Control
(as hereinafter defined) of the Company, then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnification and
Expense advances under this Agreement, the Company shall seek legal advice only
from special, independent counsel selected by the Company with the consent of
Indemnitee, which consent shall not be unreasonably withheld, with respect to
matters arising out of this Agreement, including but not limited to the right of
Indemnitee to indemnification hereunder. Such counsel shall, among other things,
render its written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would be permitted to be indemnified under the Act and as
to the amount of reasonable indemnification. Such written opinion shall be
binding upon the Company and Indemnitee. The Company shall agree to pay the
reasonable fees of such special counsel and to indemnify fully such counsel
against any and all expenses, including attorney fees, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
9.2. For the purpose of this Section 9, a "Change in Control"
shall be deemed to have occurred if:
9.2.1. Any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "1934 Act"), other
than a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportion as their
ownership of the Company, becomes the "Beneficial Owner," as defined in Rule
13d-3 under the 1934 Act, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding voting securities ("Voting Stock");
9.2.2. During any period of twenty-four (24)
consecutive months, not including any period prior to the execution of this
Agreement, individuals who at the
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beginning of such period constitute the board of directors of the Company and
any new director, other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in Section
9.2.1 or 9.2.3, whose election was approved by a vote of at least two-thirds
(2/3rds) of the shares entitled to vote, cease for any reason to constitute a
majority of the board; or
9.2.3. The stockholders of the Company (i) approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation that would result in the Voting Stock outstanding
immediately prior thereto continuing to represent, either by remaining
outstanding or by being converted into Voting Stock of the surviving entity, at
least seventy percent (70%) of the combined voting power of the Voting Stock of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, (ii) approve a plan of complete liquidation of the Company or
(iii) approve an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
10. Potential Change in Control.
10.1. In the event of a Potential Change in Control (as
hereinafter defined), the Company shall, upon written request by Indemnitee,
create a trust (the "Trust") for the benefit of Indemnitee and from time to time
upon written request of Indemnitee shall fund the Trust in an amount sufficient
to satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with investigating, preparing for and
defending any Proceeding for which Indemnitee may be entitled to indemnification
under this Agreement, and any and all Liability for which Indemnitee is entitled
to indemnification hereunder from time to time actually paid, reasonably
anticipated or proposed to be paid. The amount or amounts to be deposited in the
Trust pursuant to the foregoing funding obligations shall be determined in
accordance with the provisions of the Act with regard to determination and
authorization of indemnification.
10.2. The terms of the Trust shall provide that upon a Change
in Control:
10.2.1. The Trust shall not be revoked or the
principal thereof invaded without the prior written consent of Indemnitee;
10.2.2. The trustee of the Trust (the "Trustee")
shall advance, within two (2) business days of a written request by Indemnitee
in accordance with the requirements of Section 4, any and all Expenses to
Indemnitee, and Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which Indemnitee would be required to reimburse the Company
pursuant to the Act and Section 4;
10.2.3. The Trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above;
10.2.4. The Trustee shall promptly pay to Indemnitee
all
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amounts for which Indemnitee shall be entitled to indemnification pursuant to
this Agreement or otherwise; and
10.2.5. All unexpended funds in the Trust shall
revert to the Company upon a final determination by the special counsel
established in accordance with Section 9 or a court of competent jurisdiction,
as the case may be, that Indemnitee has been fully indemnified under the terms
of this Agreement.
10.3. The Trustee shall be selected by Indemnitee with the
consent of the Company, which consent shall not be unreasonably withheld, and
all reasonable expenses, fees and other disbursements of the Trustee in
connection with the establishment and administration of the Trust shall be paid
by the Company.
10.4. Nothing in this Section 10 shall relieve the Company of
any of its obligations under this Agreement.
10.5. A "Potential Change in Control" shall be deemed to have
occurred if: (i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control; (ii) any person,
including the Company, publicly announces an intention to take or to consider
taking actions that, if consummated, would constitute a Change in Control; (iii)
any person, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, who is or becomes the
beneficial owner, directly or indirectly, of stock of the Company representing
nine and one-half percent (9.5%) or more of the combined voting power of the
Company's then outstanding Voting Stock, increases his or her beneficial
ownership of such stock by five (5) percentage points or more over the
percentage so owned by such person; or (iv) the board of directors adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
11. Nonexclusivity and Continuation of Rights. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights
consistent with the laws of the state of Oregon to which Indemnitee may be
entitled under the Company's articles of incorporation, bylaws or any other
agreement, vote of shareholders or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding office or
while employed by or acting as agent for the Company, and shall continue
notwithstanding that Indemnitee may have ceased to be connected with the
Company.
12. Heirs, Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the heirs, successors and assigns of the Company and
Indemnitee.
13. Severability. Wherever possible, each provision in this Agreement
shall be interpreted in such manner as to be effective and valid under the laws
of the state of Oregon, but if any provision of this Agreement shall be
invalidated by any court of competent
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jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
14. Subrogation. In the event of 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 documents required and shall do
all acts necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
15. Modification and Amendment. No amendment, modification, termination
or claimed waiver of any of the provisions hereof shall be valid unless in
writing and signed by both of the parties hereto.
16. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or mailed by certified or registered mail
with postage prepaid, on the third business day after the date on which it is so
mailed:
If to Indemnitee: If to the Company:
Name Epitope, Inc.
Address Attn.: Corporate Secretary
City, State ZIP 0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
or to such other address as may have been furnished to the other party.
17. Governinq Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Oregon.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first hereinabove written.
INDEMNITEE EPITOPE, INC., an Oregon
corporation
____________________________________ By
Title:
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