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Exhibit 10.21
INDEMNIFICATION AGREEMENT
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This INDEMNIFICATION AGREEMENT, dated as of _____________, 1998 (this
"Agreement"), is made and entered into by and between Gliatech Inc., a Delaware
corporation (the "Company"), and _________________ ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
companies in today's environment;
WHEREAS, the Company's Second Restated Certificate of Incorporation
(the "Certificate") and the Amended and Restated By-Laws (the "By-Laws") provide
that the Company will indemnify its directors and officers to the fullest extent
permitted by law and will advance expenses in connection therewith, and
Indemnitee's willingness to serve as a director and/or officer of the Company is
based in part on Indemnitee's reliance on such provisions; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, and Indemnitee's reliance on the aforesaid
provisions of the Certificate and By-Laws, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by such
provisions will be available to Indemnitee regardless of, among other things,
any amendment to or revocation of such provisions or any change in the
composition of the Company's Board of Directors or any acquisition or business
combination transaction relating to the Company, the Company wishes to provide
in this Agreement for the indemnification of and the advancement of expenses to
Indemnitee as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. Certain Definitions.
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1.1. CLAIM. The term "Claim" shall mean any threatened,
pending or completed action, suit or proceeding, or any inquiry or investigation
that Indemnitee in good faith believes might lead to the institution of any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative or other.
1.2. INDEMNIFIABLE EVENT. The term "Indemnifiable Event" shall
mean any actual or asserted event or occurrence related to the fact that
Indemnitee 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, trustee, agent, or fiduciary of another corporation,
partnership,
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joint venture, employee benefit plan, trust, or other entity, or anything done
or not done by Indemnitee in any such capacity.
2. BASIC INDEMNIFICATION ARRANGEMENT. (a) In the event Indemnitee was,
is or becomes a party to or other participant in, or is threatened to be made a
party to or other participant in, a Claim by reason of (or arising in whole or
in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee
to the fullest extent permitted by law against any and all costs, charges and
expenses, including, without limitation, attorneys' fees and other fees and
expenses, judgments, fines and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in
respect of any such attorneys' fees and other fees and expenses, judgments,
fines or amounts paid in settlement) actually and reasonably incurred by
Indemnitee in connection with such Claim or any appeal therefrom, if Indemnitee
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interest of the Company, and, with respect to any
criminal action, proceeding or investigation, had no reasonable cause to believe
his or her conduct was unlawful.
(b) In the event Indemnitee was, is or becomes a party to or
other participant in, or is threatened to be made a party to or other
participant in, a Claim by or in the right of the Company to procure a judgment
in its favor by reason of (or arising in whole or in part out of) an
Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent
permitted by law against costs, charges and expenses, including, without
limitation, attorneys' fees and other fees and expenses, actually and reasonably
incurred by Indemnitee in connection with such Claim or any appeal therefrom, if
Indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any such Claim as to which
Indemnitee shall have been adjudged to be liable to the Company unless and only
to the extent that the Court of Chancery or the court in which such action, suit
or proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that the Indemnitee has been successful on
the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any Claim referred to in Sections 2(a)
or 2(b) hereof, Indemnitee shall be indemnified against costs, charges and
expenses (including attorneys' fees and other fees and expenses) actually and
reasonably incurred by him in connection therewith.
(d) Subject to Section 3(a), any indemnification under
Sections 2(a) or 2(b), unless ordered by a court, shall be made by the Company
only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the circumstances because
Indemnitee has satisfied the applicable standard set forth in Section 2(a) or
2(b), as the case may be. Subject to Section 4(a), such determination shall be
made (i) by the Board of Directors of the Company (the "Board"), by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, (ii) if such a quorum of disinterested directors is not
available or if such disinterested directors so direct, by independent legal
counsel (designated in the manner provided below in this subsection (d)) in a
written opinion or (iii) by the
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stockholders of the Company (the "Stockholders") by a majority vote of
Stockholders present at a meeting at which a quorum is present. Independent
legal counsel shall be designated by vote of a majority of the disinterested
directors; PROVIDED, HOWEVER, that if the Board is unable or fails to so
designate, such designation shall be made by the Indemnitee subject to the
approval of the Company which approval shall not be unreasonably withheld.
Independent legal counsel shall not be any person or firm 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 rights under this Agreement. The Company
agrees to pay the reasonable fees and expenses of such independent legal counsel
and to indemnify fully such counsel against costs, charges and expenses,
including, without limitation, attorneys' fees and other fees and expenses,
actually and reasonably incurred by such counsel in connection with this
Agreement or the opinion of such counsel pursuant hereto.
(e) All expenses, including, without limitation, attorneys'
fees and other fees and expenses, incurred by Indemnitee in his capacity as a
director or officer of the Company in connection with a Claim shall be paid by
the Company in advance of the final disposition of such Claim in the manner
prescribed by Section 3(b) hereof.
3. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. (a) Except as otherwise permitted or required by the Delaware General
Corporation Law (the "DGCL"), for purposes of pursuing any rights to
indemnification under Sections 2(a), 2(b) or 4(a) hereof, as the case may be,
Indemnitee may, but shall not required to, (i) submit to the entity making the
determination whether the Indemnitee is entitled to indemnification (the
"Determining Entity") a written statement of request for indemnification stating
that he or she is entitled to indemnification hereunder and the basis for
asserting such a claim for indemnification; and (ii) present to the Company
reasonable evidence of all expenses for which payment is requested. Submission
of such a written statement to the Determining Entity shall create a presumption
that the Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or
4(a) hereof, as the case may be, and the Determining Entity shall be deemed to
have determined that Indemnitee is entitled to such indemnification unless
within 30 calendar days after receipt of such written statement the Determining
Entity shall determine (i) in the case of a determination made by the Board, by
a vote of a majority of the directors who are not parties to such suit, action
or proceeding at a meeting at which a quorum is present, (ii) in the case of a
determination made by independent legal counsel, in its judgment, or (iii) in
the case of a determination made by the Stockholders, by a vote of a majority of
the Stockholders present at a meeting of Stockholders entitled to vote thereon
at a meeting at which a quorum is present, in each case based upon clear and
convincing evidence (sufficient to rebut the foregoing presumption) that
Indemnitee is not entitled to indemnification and Indemnitee shall have received
notice within such 30 calendar day period in writing of such determination that
Indemnitee is not so entitled to indemnification. The notice to the Indemnitee
specified in the preceding sentence shall disclose with particularity the
evidence in support of the Determining Entity's determination. The provisions of
this Section 3(a) are intended to be procedural only and shall not affect the
right of Indemnitee to indemnification under this Agreement and any
determination by the Determining Entity that the Indemnitee is not entitled to
indemnification and any failure to make the payments requested in the written
statement for indemnification shall be subject to judicial review as provided in
Section 7 hereof.
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(b) For purposes of determining whether to authorize
advancement of expenses pursuant to Section 2(e) hereof, Indemnitee shall submit
to the Board a sworn statement of request for advancement of expenses
substantially in the form of Exhibit 1 attached hereto and made a part hereof
(the "Undertaking"), averring that (i) he or she has reasonably incurred or will
reasonably incur actual expenses in connection with a Claim and (ii) he or she
undertakes to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Company under this Agreement or
otherwise. For purposes of requesting advancement of expenses pursuant to
Section 4(b) hereof, Indemnitee shall submit an Undertaking or such other form
of request as he or she determines to be appropriate (an "Expense Request").
Upon receipt of an Undertaking or Expense Request, as the case may be, the Board
shall within 10 calendar days authorize immediate payment of the expenses stated
in the Undertaking or Expense Request, as the case may be, whereupon such
payments shall immediately be made by the Company. No security shall be required
in connection with any Undertaking or Expense Request and any Undertaking or
Expense Request shall be accepted without reference to the Indemnitee's ability
to make repayment.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. (a) Pursuant to Section
145(f) of the DGCL, without limiting any right which Indemnitee may have
pursuant to Section 2 hereof, the Certificate, the By-Laws, the DGCL, any policy
of insurance or otherwise, but subject to the limitations on the maximum
permissible indemnity which may exist under applicable law at the time of any
request for indemnity hereunder determined as contemplated by this Section 4(a),
the Company shall indemnify Indemnitee against any amount which he or she is or
becomes legally obligated to pay relating to or arising out of any Claim because
of any act, failure to act or neglect or breach of duty, including any actual or
alleged error, misstatement or misleading statement, by reason of an
Indemnifiable Event. The payments which the Company is obligated to make
pursuant to this Section 4(a) shall include, without limitation, damages,
judgments, settlements and charges, costs, expenses, expenses of investigation
and expenses of defense of legal actions, suits, proceedings or claims,
including attorneys' fees, and appeals therefrom, and expenses of appeal,
attachment or similar bonds, including attorneys' fees; PROVIDED, HOWEVER, that
the Company shall not be obligated under this Section 4(a) to make any payment
in connection with any claim against Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from
paying which results in a final, nonappealable order; or
(ii) to the extent based upon or attributable to Indemnitee
gaining in fact a personal profit to which he or she was not legally
entitled, including, without limitation, profits made from the purchase
and sale by Indemnitee of equity securities of the Company which are
recoverable by the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934, and profits arising from transactions in publicly
traded securities of the Company which were effected by Indemnitee in
violation of Section 10(b) of the Securities Exchange Act of 1934,
including Rule 10b-5 promulgated thereunder.
The procedures set forth in Section 3(a) shall be available to the Indemnitee
for purposes of indemnification under this Section 4(a).
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(b) Expenses, including, without limitation, attorneys' fees and other
fees and expenses, incurred by Indemnitee in defending any actual or threatened
civil or criminal action, suit, proceeding or claim shall be paid by the Company
in advance of the final disposition thereof as authorized in accordance with
Section 3(b) hereof.
5. PARTIAL INDEMNITY, ETC. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Company will
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including, without
limitation, dismissal without prejudice, Indemnitee will be indemnified against
all costs, charges and expenses, including, without limitation, attorneys' fees
and other fees and expenses, incurred in connection therewith.
6. NO PRESUMPTION. For purposes of this Agreement, the termination of
any Claim by judgment, order, settlement (whether with or without court
approval), or conviction, or upon a plea of nolo contendere or its equivalent,
will not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law.
7. ENFORCEMENT. (a) If a claim for indemnification made to the Company
is not paid in full by the Company within 30 calendar days after a written claim
has been received by the Company, the Indemnitee may at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim.
(b) In any action brought under Section 7(a) hereof, it shall be a
defense to a claim for indemnification pursuant to Sections 2(a) or 2(b) hereof
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
Undertaking, if any is required, has been tendered to the Company) that the
Indemnitee has not met the standards of conduct which make it permissible under
the DGCL for the Company to indemnify the Indemnitee for the amount claimed, but
the burden of proving such defense shall be on the Company. Neither the failure
of the Company, including the Board, independent legal counsel or the
Stockholders, to have made a determination prior to commencement of such action
that indemnification of the Indemnitee is proper in the circumstances because he
has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Company, including the Board, independent legal counsel or
the Stockholders, that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
(c) It is intent of the Company that the Indemnitee not be required to
incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee
that the Company has failed to comply with any of its obligations under this
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Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any action, suit
or proceeding designed (or having the effect of being designed) to deny, or to
recover from, the Indemnitee the benefits intended to be provided to the
Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
time to time to retain counsel of his choice, at the expense of the Company as
hereinafter provided, to represent the Indemnitee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs,
charges and expenses, including, without limitation, attorneys' and other fees
and expenses, reasonably incurred by the Indemnitee (i) as a result of the
Company's failure to perform this Agreement or any provision thereof or (ii) as
a result of the Company or any person contesting the validity or enforceability
of this Agreement or any provision thereof as aforesaid.
8. NON-EXCLUSIVITY AND SEVERABILITY. (a) The rights of Indemnitee
hereunder will be in addition to any other rights Indemnitee may have under the
Certificate, the By-Laws or the DGCL or otherwise; PROVIDED, HOWEVER, that to
the extent that Indemnitee otherwise would have any greater right to
indemnification under any provision of the Certificate or By-Laws as in effect
on the date hereof, Indemnitee will be deemed to have such greater right
hereunder; and, PROVIDED FURTHER, that to the extent that any change is made to
the DGCL (whether by legislative action or judicial decision), the Certificate
and/or the By-Laws which permits any greater right to indemnification than that
provided under this Agreement as of the date hereof, Indemnitee will be deemed
to have such greater right hereunder. The Company will not adopt any amendment
to the Certificate or the By-Laws the effect of which would be to deny, diminish
or encumber Indemnitee's right to indemnification under the Certificate, the
By-Laws, the DGCL, or otherwise as applied to any act or failure to act
occurring in whole or in part prior to the date upon which the amendment was
approved by the Company's Board of Directors and/or its Stockholders, as the
case may be.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.
9. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee will be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
Company director or officer.
10. ALLOWANCE FOR COMPLIANCE WITH COMMISSION REQUIREMENTS. Indemnitee
acknowledges that the Securities and Exchange Commission (the "Commission") has
expressed the opinion that indemnification of directors and officers from
liabilities under the Securities Act of 1933 ("Act") is against public policy as
expressed in the Act and is, therefore, unenforceable. Indemnitee hereby
acknowledges and agrees that it will not be a breach of this Agreement for the
Company to undertake with the Commission in connection with the registration for
sale of any
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shares or other securities of the Company from time to time that, in the event a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director or officer of the Company
in the successful defense of any action, suit or proceeding) is asserted in
connection with such shares or other securities being registered, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of competent jurisdiction the question
of whether or not such indemnification by the Company is against public policy
as expressed in the Act and the Company will be governed by the final
adjudication of such issue. Indemnitee further agrees that such submission to a
court of competent jurisdiction shall not be a breach of this Agreement.
11. SUBROGATION. In the event of payment under this Agreement, the
Company will be subrogated to the extent of such payment to all of the related
rights of recovery of Indemnitee against other persons or entities. Indemnitee
will execute all papers reasonably required and will do everything that may be
reasonably necessary to secure such rights and enable the Company effectively to
bring suit to enforce such rights, including all of Indemnitee's reasonable
costs and expenses, including attorneys' fees and disbursements, to be
reimbursed by, or at the option of Indemnitee advanced by, the Company.
12. NO DUPLICATION OF PAYMENTS. The Company will not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Certificate, the By-Laws or otherwise) of the
amounts otherwise indemnifiable hereunder.
13. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will use
reasonable efforts to require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken place. This
Agreement will be binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any person acquiring
directly or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor will thereafter be deemed the "Company" for purposes of this
Agreement), but this Agreement will not otherwise be assignable, transferable or
delegatable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
Indemnitee's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto may, without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 12(a) and 12(b). Without limiting the generality or effect of the
foregoing, Indemnitee's right to receive payments hereunder will not be
assignable, transferable or delegatable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Indemnitee's will
or by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 12(c), the
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Company will have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
14. NOTICES. For all purposes of this Agreement, all communications,
including, without limitation, notices, consents, requests or approvals,
required or permitted to be given hereunder will be in writing and will be
deemed to have been duly given when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof orally confirmed), or five calendar
days after having been mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or one business day after having been
sent for next-day delivery by a nationally recognized overnight courier service
such as Federal Express, UPS or Purolator, addressed to the Company, to the
attention of the President of the Company, at its principal executive office and
to Indemnitee at Indemnitee's principal residence as shown in the Company's most
current records, or to such other address as any party may have furnished to the
other in writing and in accordance herewith, except that notices of changes of
address will be effective only upon receipt.
15. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
16. MISCELLANEOUS. No provision of this Agreement may be waived,
modified or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Indemnitee and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
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17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
GLIATECH, INC.
By:
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Name:
Title:
INDEMNITEE:
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Name:
Title:
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