SCOLR PHARMA, INC. OFFICER INDEMNIFICATION AGREEMENT
Exhibit
10.2
THIS AGREEMENT is made as of May 26,
2009, by and between SCOLR
Pharma, Inc., a Delaware corporation (the "Corporation"), and
________________ ("Officer"), an officer of the
Corporation.
WHEREAS, it is essential to the
Corporation to retain and attract officers who have significant experience in
business, corporate and financial matters; and
WHEREAS, the Officer possesses the
knowledge and experience desired by the Corporation and the Corporation desires
the Officer to serve as an officer of the Corporation; and
WHEREAS, the Bylaws of the Corporation
require indemnification of the officers of the Corporation to the fullest extent
permitted by the Delaware General Corporation Law (the "DGCL"), and the DGCL expressly
provides that the indemnification provisions set forth therein are not
exclusive; and
WHEREAS, the Corporation and the
Officer desire to enter into a contract that sets forth their respective rights
and obligations with regard to claims for loss, liability, expense or damage
which, directly or indirectly, may arise out of or relate to service as an
officer of the Corporation;
NOW THEREFORE, in consideration of the
premises and the covenants contained herein and Officer’s agreement to continue
to serve the Corporation after the date hereof, the sufficiency of which is
hereby acknowledged, the Corporation and Officer do hereby covenant and agree as
follows:
1.
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Agreement to
Serve. The Officer shall serve as an officer of
the Corporation. This Agreement shall not be deemed an employment contract
between the Corporation and Officer. The Officer specifically acknowledges
that Officer’s employment with the Corporation, if any, is at will, and
the Officer may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment
contract between the Officer and the Corporation, other applicable formal
severance policies duly adopted by the Board of Directors (the “Board”), or by the
Corporation’s Certificate of Incorporation, the Corporation’s Bylaws, and
the DGCL. The foregoing notwithstanding, this Agreement shall continue in
force after the Officer has ceased to serve as an officer of the
Corporation.
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2.
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Definitions. As
used in this Agreement:
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(a)
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The
term "Proceeding"
shall include any threatened, pending or completed action, suit or
proceeding, whether brought in the right of the Corporation or otherwise,
and whether of a civil, criminal, administrative or investigative nature,
whether formal or informal, in which the Officer may be or may have been
involved as a party, witness or otherwise, by reason of the fact that the
Officer is
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or
was an officer of the Corporation, or is or was serving at the request of
the Corporation (or is deemed to be serving or have served) as a director,
officer, partner, trustee, manager, employee or agent of another
corporation, limited liability company, partnership, joint venture, trust
or other enterprise, whether or not serving in such capacity at the time
any liability or expense is incurred for which exculpation,
indemnification or reimbursement can be provided under this
Agreement. The term "Proceeding" shall also
include a situation that the Officer in good faith believes may lead to
the institution of an action, suit or
proceeding.
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(b)
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The
term "Expenses"
shall mean any expense, liability or loss, including attorneys' fees,
judgments, fines, ERISA excise taxes and penalties, amounts paid or to be
paid in settlement, any interest, assessments or other charges imposed
thereon, any federal, state, local or foreign taxes imposed as a result of
the actual or deemed receipt of any payments under this Agreement, and
shall include, without limitation thereto, expenses of investigations,
judicial or administrative proceedings or appeals, attorney, accountant
and other professional fees and disbursements and any expenses of
establishing a right to indemnification under Section 12 of this
Agreement, but shall not include amounts paid in settlement by the Officer
or the amount of judgments or fines against the
Officer.
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(c)
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References
to "other
enterprise" include, without limitation, employee benefit plans;
references to "fines" include, without
limitation, any excise taxes assessed on a person with respect to any
employee benefit plan; references to "serving at the request of the
Corporation" include, without limitation, any service as a
director, officer, partner, trustee, manager, employee or agent which
imposes duties on, or involves services by, such director, officer,
partner, trustee, manager, employee or agent with respect to an employee
benefit plan, its participants, or its beneficiaries; and a person who
acted in good faith and in a manner such person reasonably believed to be
in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this
Agreement.
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(d)
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References
to "the
Corporation" shall include, in addition to the resulting entity,
any constituent corporation or other entity (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, partners, trustees, managers, employees
or agents, so that any person who is or was a director, officer, partner,
trustee, manager, employee or agent of such constituent entity, or is or
was serving at the request of such constituent entity as a director,
officer, partner, trustee, manager, employee or agent of another
corporation, limited liability company, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this Agreement
with respect to the resulting or surviving entity as such person would
have with respect to such constituent entity if its separate
existence had continued.
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(e)
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For
purposes of this Agreement, the meaning of the phrase "to the fullest
extent
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permitted by law" shall
include, but not be limited to:
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(i)
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to
the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement that
increase the extent to which a corporation may indemnify or exculpate its
officers; and
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(ii)
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to
the fullest extent permitted by any provision of the DGCL that authorizes
or contemplates additional indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the
DGCL.
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(f)
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A
"Change in
Control" shall be deemed to occur upon the earlier the earliest to
occur after the date of this Agreement of any of the following
events:
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(i)
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Acquisition of Stock by Third
Party. Any Person (as defined below) is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Corporation representing fifty percent (50%) or more of the combined
voting power of the Corporation's then outstanding securities entitled to
vote generally in the election of directors, unless (a) the change in the
relative Beneficial Ownership of the Corporation's securities by any
Person results solely from a reduction in the aggregate number of
outstanding shares of securities entitled to vote generally in
the election of directors, or (b) such acquisition was approved in advance
by the Continuing Directors (as defined below) and such acquisition would
not constitute a Change in Control under part (iii) of this
definition;
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(ii)
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Change in Board of
Directors. Individuals who, as of the date hereof,
constitute the Board, and any new director whose election by the Board or
nomination for election by the Corporation's stockholders was approved by
a vote of at least two thirds of the Directors then still in office who
were Directors on the date hereof or whose election for nomination for
election was previously so approved (collectively, the "Continuing Directors"),
cease for any reason to constitute at least a majority of the members of
the Board;
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(iii)
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Corporation
Transactions. The effective date of a
reorganization, merger or consolidation of the Corporation (a "Business Combination"),
in each case, unless, immediately following such Business Combination: (a)
all or substantially all of the Persons who were the Beneficial Owners of
securities entitled to vote generally in the election of Directors
immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 51% of the combined voting power of the then
outstanding securities of the Corporation entitled to vote generally in
the election of Directors resulting from such Business Combination
(including, without limitation, a corporation which was a result of
such
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transaction
owns the Corporation or all or substantially all of the Corporation's
assets either directly or through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, of the securities entitled to vote generally
in the election of Directors; (b) no Person (excluding any corporation
resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
Directors of such corporation except to the extent that such ownership
existed prior to such Business Combination; and (c) at least a majority of
the board of directors of the corporation resulting from such Business
Combination were Continuing Directors at the time of the execution of the
initial agreement, or of the action of the board of directors, providing
for such Business Combination;
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(iv)
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Liquidation. The
approval by the stockholders of the Corporation of a complete liquidation
of the Corporation or an agreement or series of agreements for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets, other than factoring the Corporation's current
receivables or escrows due (or, if such approval is not required, the
decision by the Board to proceed with such a liquidation, sale, or
disposition in one transaction or a series of related transactions);
or
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(v)
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Other
Events. There occurs any other event of a nature
that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act, whether or not the
Corporation is then subject to such reporting
requirement.
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(g)
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Beneficial Owner; Beneficial
Ownership. The terms "Beneficial Owner" and
"Beneficial
Ownership" shall have the meanings set forth in Rule 13d-3
promulgated under the Securities Exchange Act of
1934, as amended, as in effect on the date hereof (the "Exchange
Act") .
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(h)
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The
term "Person"
shall have the meaning as set forth in Sections 13(d) and 14(d) of the
Exchange Act as in effect on the date hereof; provided, however, that
"Person" shall exclude: (a) the Corporation; (b) any subsidiary of the
Corporation; (c) any employment benefit plan of the Corporation or of a
subsidiary of the Corporation or of any corporation owned, directly or
indirectly, by the stockholders of the Corporation in substantially the
same proportions as their ownership of stock of the Corporation; and (d)
any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or of a subsidiary of the Corporation or
of a corporation owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation.
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3.
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Limitation
of Liability.
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(a)
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To
the fullest extent permitted by law, the Officer shall have no monetary
liability of any kind or nature whatsoever in respect of the Officer’s
errors or omissions (or alleged errors or omissions) in serving the
Corporation or any of its subsidiaries, their respective shareholders or
any other enterprise at the request of the Corporation, so long as such
errors or omissions (or alleged errors or omissions), if any, are not
shown by clear and convincing evidence to have
involved:
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(i)
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any
breach of the Officer’s duty of loyalty to such entities, shareholders or
enterprises;
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(ii)
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any
act or omission not in good faith or which involved intentional misconduct
or a knowing violation of law;
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(iii)
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any
transaction from which the Officer derived an improper personal benefit;
or
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(iv)
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profits
made from the purchase and sale by the Officer of securities of the
Corporation within the meaning of Section 16(b) of the Securities Exchange
Act of 1934, as amended, or similar provision of any state statutory law
or common law.
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(b)
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Without
limiting the generality of subparagraph (a) above and to the fullest
extent permitted by law, the Officer shall have no personal liability to
the Corporation or any of its subsidiaries, their respective shareholders
or any other person claiming derivatively through the Corporation,
regardless of the theory or principle under which such liability may be
asserted, for:
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(i)
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punitive,
exemplary or consequential damages;
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(ii)
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treble
or other damages computed based upon any multiple of damages actually and
directly proved to have been
sustained;
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(iii)
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fees
of attorneys, accountants, expert witnesses or professional consultants;
or
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(iv)
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civil
fines or penalties of any kind or nature
whatsoever.
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4.
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Indemnity in Third Party
Proceedings. The Corporation shall indemnify the
Officer in accordance with the provisions of this Section 4 if the Officer
was or is a party to, or is threatened to be made a party to, any
Proceeding (other than a Proceeding by or in the right of the Corporation
to procure a judgment in its favor), against all Expenses, judgments,
fines and amounts paid in settlement, actually and reasonably incurred by
the by the Officer in connection with such Proceeding if the Officer acted
in good faith and
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in
a manner the Officer reasonably believed was in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, the Officer, in addition, had no reasonable cause to believe
that the Officer’s conduct was
unlawful.
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The
Officer shall not be entitled to indemnification under this Section 4 in
connection with any Proceeding charging improper personal benefit to the
Officer in which the Officer is finally adjudged liable without further
rights of appeal on the basis that personal benefit was improperly
received by the Officer unless and only to the extent that the court
conducting such Proceeding, or any other court of competent jurisdiction,
determines upon application that, despite the adjudication of liability,
the Officer is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances.
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5.
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Indemnity in Proceedings by or
in the Right of the Corporation. The Corporation
shall indemnify the Officer in accordance with the provisions of this
Section 5 if the Officer was or is a party to, or is threatened to be made
a party to, any Proceeding by or in the right of the Corporation to
procure a judgment in its favor, against all Expenses actually and
reasonably incurred by the Officer in connection with the defense or
settlement of such Proceeding if the Officer acted in good faith and in a
manner the Officer reasonably believed was in or not opposed to the best
interests of the Corporation. The Officer shall not be entitled to
indemnification under this Section 5 in connection with any Proceeding in
which the Officer has been finally adjudged liable without further rights
of appeal to the Corporation unless and only to the extent that the court
conducting such Proceeding, or any other court of competent jurisdiction,
determines upon application that, despite the adjudication of liability,
the Officer is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances.
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6.
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Indemnification of Expenses of
Successful Party. Notwithstanding any other
provisions of this Agreement other than Section 8, to the extent that the
Officer has been successful, on the merits or otherwise, in defense of any
Proceeding or in defense of any claim, issue or matter therein, including
the dismissal of an action without prejudice, the Corporation shall
indemnify the Officer against all Expenses actually and reasonably
incurred in connection therewith. If any Proceeding is disposed
of on the merits or otherwise (including a disposition without prejudice),
without (i) the disposition being adverse to the Officer, (ii) an
adjudication that the Officer was liable to the Corporation, (iii) a plea
of guilty by the Officer, (iv) an adjudication that the Officer did not
act in good faith, and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and (v) with respect to
any criminal proceeding, an adjudication that the Officer had reasonable
cause to believe his conduct was unlawful, the Officer shall be considered
for the purposes hereof to have been successful with respect
thereto.
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7.
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Additional
Indemnification. Notwithstanding any limitation in
Sections 4, 5 or 6, the Corporation shall indemnify the Officer to the
fullest extent permitted by law with respect to any Proceeding (including
a Proceeding by or in the right of the Corporation to procure a judgment
in its favor), against all Expenses, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by the Officer in connection
with such
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Proceeding.
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8.
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Exclusions. Notwithstanding
any provision in this Agreement, the Corporation shall not be obligated
under this Agreement to make any indemnification in connection with any
claim made against the Officer:
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(a)
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for
which payment has actually been made to or on behalf of the Officer under
any insurance policy, except with respect to any excess amount to which
the Officer is entitled under this Agreement beyond the amount of payment
under such insurance policy;
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(b)
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if
a court having jurisdiction in the matter finally determines that such
indemnification is not lawful under any applicable statute or public
policy;
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(c)
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in
connection with any Proceeding (or part of any Proceeding) initiated by
the Officer, or any Proceeding by the Officer against the Corporation or
its directors, officers, employees or other persons entitled to be
indemnified by the Corporation,
unless:
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(i)
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the
Corporation is expressly required by law to make the
indemnification;
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(ii)
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the
Proceeding was authorized by the Board of Directors of the Corporation;
or
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(iii)
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the
Officer initiated the Proceeding pursuant to Section 12 of this Agreement
and the Officer is successful in whole or in part in such Proceeding;
or
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(d)
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on
account of any Proceeding with respect to which final judgment without
further right of appeal is rendered against the Officer for payment or an
accounting of profits made from the purchase or sale by the Officer of
securities of the Corporation within the meaning of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provision of any
state statutory law or common law.
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9.
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Advances of
Expenses. The Corporation shall pay the Expenses
incurred by the Officer in any Proceeding (other than a Proceeding brought
for an accounting of profits made from the purchase and sale by the
Officer of securities of the Corporation within the meaning of Section
16(b) of the Securities Exchange Act of 1934, as amended, or similar
provision of any state statutory law or common law) in advance of the
final disposition of the Proceeding at the written request of the Officer,
if the Officer:
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(a)
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furnishes
the Corporation a written affirmation of the Officer’s good faith belief
that the Officer is entitled to be indemnified under this Agreement;
and
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(b)
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furnishes
the Corporation a written undertaking in the form attached hereto
as
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Exhibit A. Such
undertaking shall be an unlimited general obligation of the Officer but
need not be secured.
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Advances
pursuant to this Section 9 shall be made no later than 10 days after receipt by
the Corporation of the affirmation and undertaking described in Sections 9(a)
and 9(b) above, and shall be made without regard to the Officer’s ability to
repay the amount advanced and without regard to the Officer’s ultimate
entitlement to indemnification under this Agreement. Advances shall be unsecured
and interest free. The Corporation may establish a trust, escrow
account or other secured funding source for the payment of advances made and to
be made pursuant to this Section 9 or of other liability incurred by the Officer
in connection with any Proceeding.
10.
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Nonexclusivity, Effectiveness
and Continuity of Rights. The indemnification,
advancement of Expenses, and exculpation from liability provided by this
Agreement (i) shall not be deemed exclusive of any other rights to which
the Officer may be entitled under any other agreement, any certificate of
incorporation, bylaws, or vote of shareholders or directors, the DGCL, or
otherwise, both as to action in the Officer’s official capacity and as to
action in another capacity while holding such office or occupying such
position, (ii) shall apply without regard to whether the event giving rise
to a claim for indemnification, advancement, reimbursement or exculpation
occurred prior to or following the date of this Agreement, and (iii) shall
continue as to the Officer even though the Officer may have ceased to be
an officer of the Corporation or a director, officer, partner, trustee,
manager, employee or agent of an enterprise related to the Corporation and
shall inure to the benefit of the heirs, executors, administrators and
personal representatives of the
Officer.
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11.
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Procedure Upon Application for
Indemnification. Any
indemnification under Sections 4, 5, 6 or 7 shall be made no later than 45
days after receipt of the written request of the Officer, and, if required
by applicable law, only as authorized in the specific case upon a
determination that indemnification of the Officer is proper in the
circumstances because the person has met the applicable standard of
conduct set forth in sections 145(a) and (b) of the DGCL. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such
determination:
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(a)
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by
a majority vote of the directors who are not parties to such Proceeding,
even though less than a quorum; or
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(b)
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by
a committee of such directors designated by majority vote of such
directors, even though less than a quorum;
or
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(c)
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if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, which counsel shall be
appointed (i) by a majority vote of the Board of Directors or its
committee in the manner prescribed by paragraph (a) or paragraph (b) of
this Section 11, or (ii) if a quorum of the Board of Directors cannot be
obtained under paragraph (a) of this Section 11 or a committee cannot be
designated under paragraph (b) of this Section 11, then by
a
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majority
vote of the full Board of Directors, including directors who are parties
to the applicable Proceeding; or
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(d)
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by
the shareholders of the Corporation; provided that
following: a Change in Control,
all determinations concerning the rights of the Officer to indemnity
payments and expense advances under this Agreement or any other agreement
or under applicable law or the Corporation’s Certificate of Incorporation
or Bylaws now or hereafter in effect relating to indemnification shall be
made by independent counsel selected by the Officer and approved by the
Corporation (which approval shall not be unreasonably withheld or
delayed), and who has not otherwise performed services for the Corporation
or the Officer (other than in connection with indemnification matters)
within the last five years. The 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
Corporation or Officer in an action to determine Officer’s rights under
this Agreement. Such counsel, among other things, shall render its written
opinion to the Corporation and Officer as to whether and to what extent
the Officer should be permitted to be indemnified under applicable
law.
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The
Corporation agrees to pay the reasonable fees of any independent counsel engaged
hereunder and to advance expenses for and indemnify fully such counsel against
any and all expenses (including attorneys’ fees), claims, liabilities, loss and
damages arising out of or relating to this Agreement or the engagement of
independent counsel pursuant hereto.
If the
person or persons so empowered to make a determination pursuant to this Section
11 shall have failed to make the requested determination within ninety (90) days
after any judgment, order, settlement, dismissal, arbitration award, conviction,
acceptance of a plea of nolo
contendre or its equivalent, or other disposition or partial disposition
of any Proceeding or any other event that could enable the Corporation to
determine the Officer’s entitlement to indemnification, the requisite
determination that the Officer is entitled to indemnification shall be deemed to
have been made.
12.
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Enforcement. The
Officer may enforce any right to indemnification, advances or exculpation
provided by this Agreement in any court of competent jurisdiction
if:
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(a)
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the
Corporation denies the claim for indemnification, advances or exculpation,
in whole or in part; or
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(b)
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the
Corporation does not dispose of such claim within the time period required
by this Agreement.
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It shall
be a defense to any such enforcement action (other than an action brought to
enforce a claim for advancement of Expenses pursuant to, and in compliance with,
Section 9 of this Agreement) that the Officer is not entitled to indemnification
or
exculpation
under this Agreement. However, except as provided in Section 13 of this
Agreement, the Corporation shall not assert any defense to an action brought to
enforce a claim for advancement of Expenses pursuant to Section 9 of this
Agreement if the Officer has tendered to the Corporation the affirmation and
undertaking required thereunder. In making any determination concerning
Officer’s right to indemnification, there shall be a presumption that Officer
has satisfied the applicable standard of conduct, and the Corporation may
overcome such presumption only by its presenting clear and convincing evidence
to the contrary. The burden of proving by clear and convincing evidence that
indemnification or exculpation is not appropriate shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, a
committee thereof, or independent legal counsel) to have made a determination
prior to the commencement of such action that indemnification or exculpation is
proper in the circumstances because the Officer has met the applicable standard
of conduct nor an actual determination by the Corporation (including its Board
of Directors, a committee thereof, or independent legal counsel) that
indemnification or exculpation is improper because the Officer has not met such
applicable standard of conduct, shall be asserted as a defense to the action or
create a presumption that the Officer is not entitled to indemnification or
exculpation under this Agreement or otherwise. The knowledge and/or actions, or
failure to act, of any director, officer, agent or employee of the Corporation
or the Corporation itself shall not be imputed to Officer for purposes of
determining any rights under this Agreement. The Officer’s Expenses
incurred in connection with successfully establishing the Officer’s right to
indemnification, advances or exculpation, in whole or in part, in any Proceeding
shall also be paid or reimbursed by the Corporation.
The
termination of any Proceeding by judgment, order, settlement, conviction or upon
a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption
that:
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(i)
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the
Officer is not entitled to indemnification under Sections 4, 5 or 7 of
this Agreement because the Officer did not act in good faith and in a
manner which the Officer reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that the Officer’s
conduct was unlawful; or
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(ii)
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the
Officer is not entitled to exculpation under Section 3 of this
Agreement.
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The
Corporation and Officer agree that a monetary remedy for breach of this
Agreement may be inadequate, impracticable and difficult of proof, and further
agree that such breach may cause Officer irreparable
harm. Accordingly, the parties hereto agree that Officer may enforce
this Agreement by seeking injunctive relief and/or specific performance hereof,
without any necessity of showing actual damage or irreparable harm and that by
seeking injunctive relief and/or specific performance, Officer shall not be
precluded from seeking or obtaining any other relief to which he may be
entitled. The Corporation and Officer further agree that Officer
shall be entitled to such specific performance and injunctive relief, including
temporary restraining orders, preliminary
injunctions
and permanent injunctions, without the necessity of posting bonds or other
undertaking in connection therewith. The Corporation acknowledges
that in the absence of a waiver, a bond or undertaking may be required of
Officer by the Court, and the Corporation hereby waives any such requirement of
a bond or undertaking.
13.
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Notification and Defense of
Claim. Promptly after receipt by Officer of notice
of the commencement of any Proceeding, Officer shall, if a claim in
respect of the Proceeding is to be made against the Corporation hereunder,
notify the Corporation of the commencement thereof. The failure
to promptly notify the Corporation of the commencement of the Proceeding,
or Officer’s request for indemnification, will not relieve the Corporation
from any liability that it may have to Officer hereunder, except to the
extent the Corporation is prejudiced in its defense of such Proceeding as
a result of such failure. With respect to any Proceeding as to
which the Officer so notifies the Corporation of the
commencement:
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(a)
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The
Corporation shall be entitled to participate in the Proceeding at its own
expense.
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(b)
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Except
as otherwise provided in this Section 14, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified
and electing to assume such defense, assume the defense of the Proceeding,
with legal counsel reasonably satisfactory to the Officer. The Officer
shall have the right to use separate legal counsel in the Proceeding, but
the Corporation shall not be liable to the Officer under this Agreement,
including Section 9 above, for the fees and Expenses of separate legal
counsel incurred after notice from the Corporation of its assumption of
the defense, unless (i) the Officer reasonably concludes that there may be
a conflict of interest between the Corporation and the Officer in the
conduct of the defense of the Proceeding, or (ii) the Corporation does not
use legal counsel to assume the defense of such Proceeding. The
Corporation shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Corporation or as to which the Officer has
made the conclusion provided for in (i)
above.
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(c)
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If
two or more persons who may be entitled to indemnification from the
Corporation, including the Officer, are parties to any Proceeding, the
Corporation may require the Officer to use the same legal counsel as the
other parties. The Officer shall have the right to use separate legal
counsel in the Proceeding, but the Corporation shall not be liable to the
Officer under this Agreement, including Section 9 above, for the fees and
Expenses of separate legal counsel incurred after notice from the
Corporation of the requirement to use the same legal counsel as the other
parties, unless the Officer reasonably concludes that there may be a
conflict of interest between the Officer and any of the other parties
required by the Corporation to be represented by the same legal
counsel.
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(d)
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The
Corporation shall not be liable to indemnify the Officer under this
Agreement for any amounts paid in settlement of any Proceeding effected
without its written
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consent,
which shall not be unreasonably withheld. The Corporation shall not be
required to obtain the consent of the Officer for the settlement of any
Proceeding the Corporation has undertaken to defend if the Corporation
assumes full and sole responsibility for each such settlement; provided, however, that
the Corporation shall be required to obtain Officer’s prior written
approval, which may be granted or withheld in Officer’s sole, reasonable
discretion, before entering into any settlement which (i) does not grant
Officer a complete and unqualified release of liability; (ii) would impose
any penalty or limitation on Officer, or (b) would admit any liability or
misconduct by Officer.
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14.
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Partial
Indemnification. If the Officer is entitled under any
provision of this Agreement to indemnification by the Corporation for some
or a portion of the Expenses, judgments, fines or amounts paid in
settlement, actually and reasonably incurred by the Officer in connection
with such Proceeding, but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify the Officer for the portion of
such Expenses, judgments, fines or amounts paid in settlement to which the
Officer is entitled.
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15.
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Contribution. In
order to provide for just and equitable contribution in circumstances in
which the indemnification provided for herein is held by a court of
competent jurisdiction to be unavailable to the Officer in whole or in
part, it is agreed that, in such event, the Corporation shall, to the
fullest extent permitted by law, contribute the payment of the Officer’s
costs, charges and Expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement with respect to any Proceeding, whether
civil, criminal, administrative or investigative, in an amount that is
just and equitable in the circumstances, taking into account, among other
things, contributions by other directors and officers of the Corporation
or others pursuant to indemnification agreements or otherwise; provided,
that, without limiting the generality of the foregoing, such contribution
shall not be required where such holding by the court is due to (i) the
failure of the Officer to meet the standard of conduct set forth in
Section 4 hereof, or (ii) any limitation on indemnification set forth in
Sections 4, 5 or 8 hereof.
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16. D&O Liability
Insurance.
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(a)
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Maintenance of
Insurance. The Corporation
hereby covenants and agrees that, so long as the Officer shall continue to
serve the Corporation in any of the capacities set forth in the definition
of "Proceeding"
above, and thereafter so long as the Officer shall be subject to any
possible Proceeding by reason of the fact that the Officer was serving in
any such capacity, the Corporation shall promptly obtain and maintain in
full force and effect directors’ and officers’ liability insurance
("D&O Insurance") in reasonable amounts from established and reputable
insurers.
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(b)
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Annual
Review. At the Officer’s request, the Corporation
shall arrange an annual review of the Corporation's D&O Insurance by
an independent insurance adviser, all fees and charges arising from such
review to be met by the
Corporation.
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(c)
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Tail
Coverage. In the event of a Change in Control, the
Corporation shall maintain in force any and all insurance policies then
maintained by the Corporation providing insurance in respect of Officer,
including without limitation D&O Insurance, for a period of six years
thereafter. The policies for such continued coverage shall be
placed by a broker engaged by the Corporation prior to such Change in
Control.
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(d)
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Pursuit of the Insurance
Company. The Corporation shall indemnify Officer
for Expenses incurred by Officer in connection with action brought by
Officer for recovery under any insurance policy referred to in this
Section 16, and shall advance to Officer the Expenses of such action;
provided,
however,
that by executing this Agreement Officer hereby undertakes to promptly
re-pay the Corporation for any such advanced Expenses if a court of
competent jurisdiction finds that all of the claims brought by the Officer
were frivolous and not in good
faith.
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17.
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Interpretation and Scope of
Agreement. Nothing in this Agreement shall be
interpreted to constitute a contract of service for any particular period
or pursuant to any particular terms or conditions. The Corporation retains
the right, in its discretion, to terminate the service relationship of the
Officer, with or without cause, or to alter the terms and conditions of
the Officer’s service all without prejudice to any rights of the Officer
which may have accrued or vested prior to such action by the
Corporation. The Corporation shall be precluded from asserting
in any such proceeding that the procedures and presumptions of this
Agreement are not valid, binding and enforceable and shall stipulate in
any such court that the Corporation is bound by all the provisions of this
Agreement and is precluded from making any assertion to the
contrary.
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18.
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Severability.
If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, the remainder of this
Agreement shall continue to be valid and the Corporation shall
nevertheless indemnify the Officer as to Expenses, judgments, fines and
amounts paid in settlement with respect to any Proceeding to the fullest
extent permitted by any applicable portion of this Agreement that shall
not have been invalidated.
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19.
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Subrogation. In
the event of payment under this Agreement, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery
of the Officer with respect to any insurance policy or otherwise. The
Officer shall execute all documents required and shall do all acts that
may be necessary to secure such rights and to enable the Corporation
effectively to bring suit to enforce such rights. The
Corporation shall pay or reimburse all Expenses actually and reasonably
incurred by Officer in connection with such
subrogation.
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20.
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Notices. All
notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given upon
delivery by hand to the party to whom the notice or other communication
shall have been directed,
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or
on the third business day after the date on which it is mailed by United
States mail with first-class postage prepaid, addressed as
follows:
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If
to Officer:
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_____________________
_____________________
Attn:_________________
Facsimile:
_____________
E-mail:________________
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If
to Corporation:
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00000
Xxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn:
Fascimile: (000) 000-0000
E-mail:
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With
a copy to:
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Xxxxxx
Xxxxxxxx Xxxxx
Eighteenth Floor
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx
00000-0000
Attne: Xxxxx X. Xxxxxxxxx,
Esquire
Facsimile: (000) 000-0000
E-mail:
xxxxxxxxxx@xxxxxx.xxx
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or to any
other address as either party may designate to the other in
writing.
21.
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Counterparts. This
Agreement may be executed in any number of counterparts, each of which
shall constitute the original.
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22.
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Successors and
Assigns. All of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall
be enforceable by the parties hereto and their respective successors,
assigns, heirs, executors, administrators and legal
representatives. The Corporation shall require and cause any
direct or indirect successor (whether by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or assets of the
Corporation, by written agreement in form and substance reasonably
satisfactory to Officer, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation
would be required to perform if no such succession had taken
place.
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23.
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Applicable
Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of Delaware
without regard to the principles of conflict of
laws.
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24.
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Attorney
Fees. If any suit or action (including, without
limitation, any bankruptcy proceeding) is instituted to enforce or
interpret any provision of this Agreement, the
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prevailing
party shall be entitled to recover from the party not prevailing, in
addition to other relief that may be provided by law, an amount determined
reasonable as attorney fees at trial and on any appeal of such suit or
action.
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25.
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Modification and
Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
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26.
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Jurisdiction and
Venue. Each party hereto expressly and irrevocably
consents and submits to the jurisdiction and venue of any state or federal
court sitting in King County, Washington, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in such
court and to the appellate courts in connection with any appeal. The
parties expressly waive all defenses of lack of personal jurisdiction,
improper venue and forum
non-conveniens with respect to such federal and state courts
sitting within King County, Washington. The parties expressly consent to
(i) service of process being effected upon them by certified mail sent to
the addresses set forth in this Agreement and (ii) any final judgment
rendered against a party in any action or proceeding being enforceable in
other jurisdictions in any manner provided by
law.
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27.
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Period of
Limitations. No legal action shall be brought and
no cause of action shall be asserted by or in the right of the Corporation
against Officer, Officer’s estate, spouse, heirs, executors or personal or
legal representatives after the expiration of two years from the date of
accrual of such cause of action, and any claim or cause of action of the
Corporation shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within such two-year period; provided,
however, that if any shorter period of limitations is otherwise applicable
to any such cause of action, such shorter period shall
govern.
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[Remainder
of this page intentionally left blank.]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as
of the date first written above.
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OFFICER:
_____________________________
Signature
Print Name: ____________________
CORPORATION:
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By:
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______________________________
Signature
Print Name: _____________________
Title:
__________________________
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EXHIBIT
A
FORM
OF UNDERTAKING
The
undersigned is the Officer as defined in that certain Officer Indemnification
Agreement dated May 26, 2009 between the undersigned and SCOLR Pharma, Inc. (the
"Indemnification Agreement"). Capitalized terms not otherwise defined
herein shall have the meanings given in such agreement.
As a
condition to receiving advances of Expenses as provided in Section 9 of the
Indemnification Agreement, Officer agrees that, if, when and to the extent that
a final judicial determination is made that Officer would not be permitted to be
so indemnified under applicable law, the Officer shall reimburse the Corporation
for all amounts theretofore paid by the Corporation to Officer pursuant to the
Indemnification Agreement within 60 days of the Corporation’s demand, but only
to the extent that Officer is ultimately found not to be entitled to be
indemnified by the Corporation under the terms of the Indemnification Agreement,
the charter documents of the Corporation (including its certificate of
incorporation and bylaws), and applicable state law.
This
Agreement shall not affect in any manner rights which Officer may have against
the Corporation, any insurer or any other person to seek indemnification for or
reimbursement of any expenses referred to herein or any judgment which may be
rendered in any litigation or proceeding.
FOR
EXHIBIT PURPOSES ONLY,
NO SIGNATURE REQUIRED __________________________
Officer
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Exhbit A