MARTEK BIOSCIENCES CORPORATION INDEMNIFICATION AGREEMENT
Exhibit 10.01
MARTEK BIOSCIENCES CORPORATION
This Indemnification Agreement (“Agreement”) is effective as of
_____, 2009, by and between
Martek Biosciences Corporation, a Delaware corporation (“Martek” or the “Company”), and
_____________ (“Indemnified Person”).
WHEREAS, Martek desires to attract and retain the services of highly qualified individuals,
such as Indemnified Person, to serve Martek and its related entities;
WHEREAS, in order to induce Indemnified Person to continue to provide services to Martek as
[an officer] [or] [a member of the Board of Directors] and in order to provide Indemnified Person
with specific contractual assurance that indemnification will be available to Indemnified Person
regardless of, among other things, any amendment or revocation of Martek’s Certificate of
Incorporation or any acquisition transaction relating to Martek, Martek wishes to provide for the
indemnification of, and the advancement of expenses to, Indemnified Person to the maximum extent
permitted by law;
WHEREAS, Martek’s Certificate of Incorporation requires indemnification of officers and
directors of Martek, and the Indemnified Person may also be entitled to indemnification pursuant to
the General Corporation Law of the State of Delaware (the “DGCL”) or other provisions of law;
WHEREAS, Martek’s Certificate of Incorporation and the DGCL expressly provide that their
respective indemnification provisions are not exclusive, and contemplate that Martek, on the one
hand, and members of the Board of Directors, officers and other persons, on the other hand, may
enter into contracts with respect to indemnification;
WHEREAS, Martek and Indemnified Person recognize the significant amount of corporate
litigation in general, subjecting directors, officers, employees, agents and fiduciaries to
expensive litigation risks at the same time as the cost, availability and scope of coverage of
liability insurance has been limited;
WHEREAS, Martek’s Board of Directors has determined that it is in the best interests of the
Company’s stockholders for the Company to be able to attract and retain highly qualified persons
such as the Indemnified Person and that increased certainty of protection afforded by this
Agreement is a reasonable, necessary and prudent act to help ensure that persons such as the
Indemnified Person will serve and continue to serve the Company free from undue concern that they
will not be indemnified or have expenses associated with claims advanced;
WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided
for in Martek’s Certificate of Incorporation and any resolutions adopted pursuant to it, or in any
other provision of law, and it shall not substitute for, diminish or abrogate any rights of the
Indemnified Person under such other source of indemnification right; and
WHEREAS, in view of the considerations set forth above, Martek desires that Indemnified Person
shall be indemnified and advanced expenses by Martek as set forth herein;
NOW, THEREFORE, Martek and Indemnified Person hereby agree as set forth below.
1. Certain Definitions. As used in this Agreement:
(a) “Board of Directors” shall mean the Board of Directors of Martek.
(b) “Board Member” shall mean an individual (i) elected by stockholders of Martek or (ii)
appointed by members of its Board of Directors to serve on its Board of Directors.
(c) “Change in Control” shall mean a change in the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of Martek or any successor in
interest to Martek, whether through the ownership of voting securities, by contract or otherwise.
A rebuttable presumption of a Change in Control shall be created by any of the following that first
occur after the date of this Agreement (and Martek shall bear the burden of proof to overcome such
presumption): (i) any “person” (including, without limitation, any individual, sole proprietorship,
partnership, trust, corporation, association, joint venture, or other entity, whether or not
incorporated), or “group” of persons (as defined in Sections 13(d) and14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), becomes, after the date of this Agreement,
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing twenty percent (20%) or more of the combined voting power
of the Company’s then outstanding securities; (ii) during any two (2) year period, individuals who
constitute the Board of Directors at the beginning of such period, together with any new directors
elected or appointed during the period whose election or appointment resulted from a vacancy on the
Board of Directors caused by retirement, death, or disability of a director and whose election or
appointment was approved by a vote of at least a majority of the directors then still in office who
were directors at the beginning of the period, cease for any reason to constitute a majority of the
Board of Directors; (iii) the Company sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person; (iv) the Company consolidates
with, or merges with or into another entity, or any entity consolidates with, or merges with or
into, the Company, in which the owners of outstanding voting stock of the Company immediately prior
to such consolidation or merger do not represent at least a majority of the voting power in the
surviving entity after the consolidation or merger; or (v) the stockholders of the Company approve
a plan of liquidation or dissolution.
(d) “Claim” shall mean any request made by Indemnified Person to the Company under this
Agreement for indemnification or reimbursement of Expenses or for an Expense Advance.
(e) “Corporate Status” describes the status of a person who is or was a Board Member, officer,
employee or agent of the Company or of any corporation, partnership, joint venture, trust, employee
benefit plan or other enterprises which such person was or is serving at the request of Martek.
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(f) “Covered Event” shall mean any Proceeding in which Indemnified Person was, is or
reasonably and in good faith believes he [or she] will be involved as a party or otherwise by
reason of the fact of the Indemnified Person’s Corporate Status, by reason of any action taken by
Indemnified Person or of any action on his [or her] part while acting in his [or her]
Corporate Status, or by reason of the fact that he [or she] was serving at the request of Martek as
a Board Member, officer, employee, agent or fiduciary of any other enterprises, in each case
whether or not serving in such capacity at the time any liability or Expense is incurred for which
indemnification, reimbursement or Expense Advance is sought under this Agreement.
(g) “Expenses” shall mean any and all expenses including: (i) (A) reasonable attorneys’ fees
and other costs, expenses and obligations customarily incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal and including the premium
and other costs relating to any cost, supersedes or other appeal bond), or preparing to defend, to
be a witness in or to participate in, any action, suit, proceeding, arbitration, alternative
dispute resolution mechanism, hearing, inquiry or investigation, and (B) judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in advance by Martek,
which approval shall not be unreasonably withheld), so long as such expenses relate to a Covered
Event, and (ii) any federal, state, local or foreign taxes imposed on the Indemnified Person as a
result of the actual or deemed receipt of any payments under this Agreement.
(h) “Expense Advance” shall mean a payment to Indemnified Person pursuant to Section 3 of
Expenses in advance of the settlement of or final judgment in any action, suit, proceeding,
arbitration, or alternative dispute resolution mechanism, hearing, inquiry or investigation.
(i) “Independent Legal Counsel” shall mean an attorney or firm of attorneys, selected in
accordance with the provisions of Section 2(d) hereof, who shall be experienced in matters of
corporation law and who shall not have otherwise performed services for Martek or Indemnified
Person within the last five years (other than with respect to matters concerning the rights of
Indemnified Person under this Agreement, or of other Indemnified Persons under similar indemnity
agreements).
(j) “Proceeding” means any threatened, pending or completed action, suit, proceeding,
arbitration or alternative dispute resolution mechanism, investigation (whether designated by the
investigative agency as a formal investigation or otherwise), inquiry, administrative hearing or
any other actual, threatened or completed proceeding, whether brought in the right of the Company
or otherwise and whether of a civil, criminal, administrative, regulatory or investigative nature;
provided, however, that the term Proceeding shall not include any action, suit or arbitration
initiated by Indemnified Person to enforce Indemnified Person’s rights under this Agreement.
(k) References to “Martek” shall include, in addition to Martek, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or merger to which Martek.
(or any of its wholly owned subsidiaries) is a party which, if its separate existence had
continued, would have had power and authority to indemnify its directors, officers, managers,
employees, agents or fiduciaries such that if Indemnified Person is or was a director, officer,
manager, employee, agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, manager, partner (general or
limited), member, trustee, employee, agent or fiduciary of another corporation, partnership, joint
venture, limited liability company, employee benefit plan, trust or other enterprises, Indemnified
Person shall stand in the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnified Person would have with respect to such
constituent corporation if its separate existence had continued.
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(l) References to “other enterprises” shall include employee benefit plans sponsored by Martek
or made available by Martek to the Company’s employees; references to “fines” shall include any
excise taxes assessed on Indemnified Person with respect to an employee benefit plan; and
references to “serving at the request of Martek” shall include any service as a Board Member,
officer, employee, agent or fiduciary of Martek that imposes duties on, or involves services by,
such Board Member, officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnified Person acted in good faith and in a
manner Indemnified Person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnified Person shall be deemed to have acted in a
manner “not opposed to the best interests of Martek” as referred to in this Agreement.
(m) “Reviewing Party” shall mean, subject to the provisions of Section 2(d), any person or
body appointed by the Board of Directors (and in the event of a Change in Control, approved by the
Indemnified Person, which approval shall not be unreasonably withheld), in accordance with
applicable law to review Martek’s obligations under this Agreement and applicable law. Subject to
the provisions of Section 2(d), the Reviewing Party may include a member or members of the Board of
Directors, Independent Legal Counsel or any other person or body not a party to the particular
Claim for which Indemnified Person is seeking indemnification.
(n) “Section” refers to a section of this Agreement unless otherwise indicated.
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of Section 2(b) below,
Martek shall indemnify Indemnified Person for Expenses to the fullest extent permitted by law if
Indemnified Person was or is or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, any Covered Event arising out
of a Proceeding, if with respect to the Covered Event, Indemnified Person acted in good faith and
in a manner he [or she] reasonably believed to be in or not opposed to the best interests of Martek
and, in the case of a criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful. In the case of Proceedings by or in the right of the Company, Indemnified Person shall
not be indemnified for Expenses in respect of any Covered Event, or issue or matter that is part of
a Covered Event as to which Indemnified Person shall have been finally adjudged by a court to be
liable to the Company, unless and only to the extent that the Delaware Court of Chancery (the
“Delaware Court”) or any court in which the Proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the circumstances of the case,
Indemnified Person is fairly and reasonably entitled to indemnification for such Expenses as the
Delaware Court or such other court shall deem proper.
(b) Review of Indemnification Obligations. Notwithstanding Section 2(a), if any
Reviewing Party determines that indemnification of Indemnified Person under this Agreement would
constitute a violation of applicable law (a “Negative Determination”), (i) Martek shall have no
further obligation under Section 2(a) to make any payments to or on behalf of Indemnified Person
not made prior to the Negative Determination, and (ii) Martek shall be entitled to reimbursement
from Indemnified Person (who hereby agrees to reimburse Martek) for all Expenses paid to or on
behalf of Indemnified Person that are encompassed by the Negative Determination (the “Negative
Determination Expenses”). This Section 2(b) is subject to the
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following: If, within thirty days
of notice of a Negative Determination, Indemnified Person has commenced or commences legal
proceedings in a court of competent jurisdiction to secure a determination that Indemnified Person
is entitled to be indemnified under this Agreement or applicable law, any Negative Determination
shall not be binding; and Martek shall continue to advance Expenses and Indemnified Person shall
not be required to reimburse Martek for any Negative Determination Expenses until a final judicial
determination is made (as to which all rights of appeal have been exhausted or lapsed) concerning
Indemnified Person’s entitlement to indemnification under this Agreement or applicable law. Any
Negative Determination must be issued in writing. Notwithstanding anything in this Agreement to
the contrary, the Company shall be under no obligation to make a determination concerning
Indemnified Person’s entitlement to indemnification for a particular Claim prior to final
disposition of a Covered Event, including all appeals.
(c) Indemnified Person Rights on Unfavorable Determination; Binding Effect. If any
Reviewing Party determines that indemnification of Indemnified Person would, in whole or in part,
constitute a violation of applicable law, Indemnified Person shall have the right to commence
litigation in the Delaware Court seeking an initial determination by the court or challenging any
such determination by such Reviewing Party or any aspect thereof, including the legal or factual
bases therefore. Subject to the provisions of Section 15, Martek hereby consents to service of
process and to appear in any such proceeding. Absent such litigation, any determination by any
Reviewing Party shall be conclusive and binding on Martek and Indemnified Person.
(d) Selection of Reviewing Party; Change in Control. Upon request of Indemnified
Person, the Board of Directors shall select a Reviewing Party. If a Change in Control (other than
a Change in Control that has been approved by a majority of the Board of Directors who were Board
Members immediately prior to such Change in Control) has occurred, any Reviewing Party with respect
to all issues, disputes or other matters that arise after the Change in Control and that concern
the rights of Indemnified Person to indemnification of Expenses under this Agreement or any other
agreement or under Martek’s Certificate of Incorporation as now or hereafter in effect, or under
any other applicable law, shall, if Indemnified Person so requests, be Independent Legal Counsel
selected by Indemnified Person and approved by Martek (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to Martek and
Indemnified Person as to whether and to what extent indemnification of Indemnified Person would
constitute a violation of applicable law; and Martek and Indemnified Person agree to abide by such
opinion (subject to the right to judicial review of the decision pursuant to Section 2(c)). Martek
agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to
indemnify such counsel against expenses (including reasonable attorneys’ fees), claims, liabilities
and damages arising out of this Agreement or its engagement pursuant to the Agreement.
Notwithstanding any other provision of this Agreement, Martek shall not be required to pay Expenses
of more than one Independent Legal Counsel in connection with all matters concerning a single
Indemnified Person, and such Independent Legal Counsel shall be the Independent Legal Counsel for
any or all other Indemnified Persons unless (i) Martek otherwise determines or (ii) any Indemnified
Person shall provide a written statement setting forth in detail a reasonable objection to such
Independent Legal Counsel representing other Indemnified Persons.
(e) Mandatory Payment of Expenses. Notwithstanding any other provision of this
Agreement other than Section 10 hereof, to the extent that Indemnified Person has been successful
on the merits or otherwise, including, without limitation, the dismissal of an action without
prejudice, in
defense of any Covered Event, Indemnified Person shall be indemnified against all reasonable
Expenses incurred by Indemnified Person in connection with the Covered Event.
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(f) Expenses as a Witness. Notwithstanding any other provision of this Agreement, to
the extent that Indemnified Person is, by reason of his status with the Company, a witness in
connection with any Proceeding to which Indemnified Person is not a party, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. Upon receipt of a written undertaking by or
on behalf of the Indemnified Person to repay such amounts if it shall ultimately be determined that
the Indemnified Person is not entitled to be indemnified therefore by Martek hereunder under
applicable law, Martek shall make Expense Advances to Indemnified Person.
(b) Form of Undertaking. Any obligation to repay any Expense Advances hereunder
pursuant to a written undertaking by the Indemnified Person shall be unsecured and may be accepted
without reference to financial ability to make the repayment and no interest shall be charged
thereon.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including without limitation
Expense Advances) by Martek to or on behalf of the Indemnified Person pursuant to this Agreement
shall be made to the fullest extent permitted by law as soon as reasonably practicable after
written demand by Indemnified Person therefor is presented to Martek, but in no event later than
thirty (30) days after such written demand by Indemnified Person is presented to Martek. Once
notice of a Claim is given pursuant to Section 4(b) in a manner that identifies an attorney
retained by the Indemnified Person in connection with the Claim, the presentation by such attorney
of an invoice for services rendered shall constitute a written demand for payment and no separate
demand from the Indemnified Person for payment of each invoice is necessary; provided, however,
that the invoices presented include sufficient detail as to the services rendered to permit the
Company or its insurers the ability to assess the reasonableness of the Expense Advance requested.
The payment obligation under this Section 4(a) shall apply without regard to whether the Company
may have insurance or indemnity rights applicable to all or a portion of any Expense Advance.
(b) Notice/Cooperation by Indemnified Person. Indemnified Person shall give Martek
notice in writing as soon as practicable of any Covered Event made against Indemnified Person for
which a Claim, will or could be sought under this Agreement; provided, however, that the failure to
so notify Martek shall not relieve Martek of its obligations under this Agreement except to the
extent that Martek can demonstrate that such failure has materially prejudiced Martek. Notice to
Martek shall be directed to the Chief Executive Officer and the General Counsel of the Company at
the address shown on the signature page of this Agreement (or such other address as Martek shall
designate in writing to Indemnified Person). In addition, each of the Indemnified Person and
Martek shall give the other party such information related to a Covered Event and cooperation as
the other party may reasonably require and as shall be within such party’s power. Without limiting
the generality of this cooperation
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obligation, Indemnified Person shall work reasonably with the Company to manage Expenses, and such cooperation may be considered in assessing the
reasonableness of Expenses that are the subject of a Claim; provided, however, that nothing in this
sentence shall be construed to undermine the purpose of this Agreement or prejudice Indemnified
Person or to purport to modify the professional obligations of Indemnified Person’s legal counsel.
Among examples of actions that Indemnified Person agrees to consider to help manage Expenses
include (i) being represented jointly with the Company and/or other directors, officers, employees
or agents of the Company, (ii) being represented by shadow counsel while publicly remaining part of
a larger group of persons being jointly represented, and (iii) seeking advance approval from
appropriate representatives of the Company before retaining expert witnesses or consultants, or
undertaking large projects such as the preparation of an evidence database. Nothing in this
cooperation obligation shall be construed to require either the Company or Indemnified Person to
compromise or violate any legal, ethical or contractual obligation or otherwise limit legal rights
that the party otherwise has. Indemnified Person shall cooperate with reasonable requests from the
Company necessary to obtain appropriate recovery under the Company’s insurance programs, including
without limitation directors’ and officers’ liability and fiduciary liability insurance policies.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement, the termination
of any Covered Event by judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption
that Indemnified Person failed to meet any particular standard of conduct or lacked any particular
belief or that a court has determined that indemnification is not permitted by this Agreement or
applicable law. Neither the failure of any Reviewing Party to determine whether Indemnified Person
has met any particular standard of conduct or had any particular belief, nor a Reviewing Party’s
actual determination that Indemnified Person has failed to meet such standard of conduct or lacked
such belief, shall serve, prior to the commencement of legal proceedings by Indemnified Person to
secure a judicial determination that Indemnified Person should be indemnified under this Agreement
or under applicable law, as a defense to Indemnified Person’s Claim or create a presumption that
Indemnified Person has not met any particular standard of conduct or did not have any particular
belief. In connection with any determination by any Reviewing Party or otherwise as to whether the
Indemnified Person is entitled to be indemnified and/or to receive Expense Advances under this
Agreement and under applicable law, the burden of proof shall be on Martek to establish that
Indemnified Person is not so entitled. Notwithstanding the absence of any presumption created by a
Reviewing Party’s determination, nothing in this Section 4(c) shall otherwise limit the
admissibility into evidence of documents or testimony related to the Reviewing Party’s work,
including without limitation any report issued by the Reviewing Party, documents or other materials
relied upon by the Reviewing Party or testimony from the Reviewing Party.
(d) Notice to Insurers. If, at the time of the receipt by Martek of a notice of a
Claim pursuant to Section 4(b) hereof, Martek has liability insurance in effect which may cover
such Claim, Martek shall give prompt notice of the commencement of such Claim to the insurers in
accordance with the procedures set forth in the respective policies. Martek shall thereafter take
all reasonable, necessary or desirable actions to cause such insurers to pay, on behalf of the
Indemnified Person, all amounts payable as a result of such Claim in accordance with the terms of
such policies. Upon written request from Indemnified Person, Martek shall provide copies of all
insurance policies that arguably afford coverage for a Claim.
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(e) Selection of Counsel. Martek shall have the right to approve Indemnified Person’s
selection of counsel with respect to any Covered Event (which approval shall not be
unreasonably withheld). In the event Martek shall be obligated under this Agreement to
satisfy a Claim, Martek, if appropriate, shall be entitled to assume the defense of such Covered
Event with counsel approved by Indemnified Person (which approval shall not be unreasonably
withheld) upon the delivery to Indemnified Person of written notice of Martek’s election to do so.
After delivery of such notice, approval of such counsel by Indemnified Person and the retention of
such counsel by Martek, Martek will not be liable to Indemnified Person under this Agreement for
any fees or expenses of separate counsel subsequently retained by or on behalf of Indemnified
Person with respect to the same Covered Event; provided, that, (i) Indemnified Person shall have
the right to employ Indemnified Person’s separate counsel in any such Covered Event at Indemnified
Person’s expense and (ii) if (A) the employment of separate counsel by Indemnified Person has been
previously authorized by Martek, (B) Indemnified Person shall have reasonably concluded that there
may be a conflict of interest between Martek and Indemnified Person in the conduct of any such
defense, (C) Indemnified Person shall have reasonably concluded that Indemnified Person’s interests
and those of Martek may be inconsistent, or (D) Martek shall not continue to retain such counsel to
defend such Covered Event, then the fees and expenses of Indemnified Person’s separate counsel
shall be Expenses for which Indemnified Person may receive indemnification or Expense Advances
hereunder.
(f) Settlements. Martek shall not be liable to indemnify Indemnified Person under
this Agreement for any amounts paid in settlement of any Covered Event agreed or entered into
without Martek’s written consent. Martek shall not settle any Covered Event in any manner that
would impose any penalty or limitation on Indemnified Person or that would require the
acknowledgment of any wrongdoing by Indemnified Person without Indemnified Person’s written
consent. Neither Martek nor Indemnified Person will unreasonably withhold consent to a proposed
settlement of a Covered Event.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Martek hereby agrees to indemnify the Indemnified Person to the fullest
extent permitted by law, notwithstanding that such indemnification is not specifically authorized
by the other provisions of this Agreement, Martek’s Certificate of Incorporation or by statute. In
the event of any change after the date of this Agreement in any applicable law, statute or rule
that expands the right of a Delaware corporation to indemnify a director, officer, employee, agent
or fiduciary, it is the intent of the parties to this Agreement that Indemnified Person shall enjoy
by this Agreement the greater benefits afforded by such change. In the event of any change in any
applicable law, statute or rule that narrows the right of a Delaware corporation to indemnify a
member of its Board of Directors or a director, officer, employee, agent or fiduciary, such change,
to the extent not otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties’ rights and obligations under this Agreement
except as set forth in Section 11(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of Expense Advances provided
by this Agreement shall be in addition to any rights to which Indemnified Person may be entitled
under Martek’s Certificate of Incorporation or bylaws, any other agreement, any vote of
stockholders or disinterested Board Members, the DGCL or otherwise. The indemnification and the
payment of Expense Advances provided for under this Agreement shall continue as to Indemnified
Person for any action taken or not taken while serving in an indemnified capacity even though
subsequent thereto Indemnified Person may have ceased to serve in such capacity.
6. No Duplication of Payments. Martek shall not be liable under this Agreement to
make any payment in connection with any Covered Event made against Indemnified Person to the extent
Indemnified Person has otherwise actually received payment from or on behalf of Martek (under any
insurance policy, provision of Martek’s Certificate of Incorporation or otherwise) of the amounts
otherwise payable hereunder.
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7. Partial Indemnification. If Indemnified Person is entitled under any provision of
this Agreement or otherwise to indemnification by Martek for some or a portion of Expenses incurred
in connection with any Covered Event, but not, however, for all of the total amount thereof, Martek
shall nevertheless indemnify Indemnified Person for the portion of such Expenses to which
Indemnified Person is entitled. Allocation between indemnifiable and non-indemnifiable Expenses
shall be determined by the parties in good faith negotiations based on the relative exposure to
Indemnified Person of the indemnifiable as compared with the non-indemnifiable Expenses.
8. Mutual Acknowledgment. Both Martek and Indemnified Person acknowledge that in
certain instances, federal law or applicable public policy may prohibit Martek from indemnifying
its Board Members, officers, employees, agents or fiduciaries under this Agreement or otherwise.
Indemnified Person understands and acknowledges that Martek has undertaken or may be required in
the future to undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of Martek’s right under
public policy to indemnify Indemnified Person.
9. Liability Insurance. To the extent such coverage is obtainable on commercially
reasonable terms in Martek’s discretion, Martek shall maintain directors’ and officers’ liability
insurance or fiduciary liability insurance applicable to [Board Members], [officers], [key
employees, agents or fiduciaries], and Indemnified Person shall be covered by such policies in such
a manner as to provide Indemnified Person the same rights and benefits as are provided to the most
favorably insured of [Board Members] [or] [Martek’s officers] [or] [Martek’s key employees, agents
or fiduciaries]. Upon any Change in Control, Martek shall obtain continuation and/or “tail”
coverage for Indemnified Person to the extent such coverage is obtainable at such time at
reasonable cost in the context of the market for directors and officers insurance as such market
has existed over the five years prior to the Change in Control.
10. Exceptions. Notwithstanding any other provision of this Agreement, Martek shall
not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify or make Expense Advances to
Indemnified Person with respect to Covered Events arising out of acts, omissions or transactions
for which Indemnified Person is prohibited from receiving indemnification under the DGCL or other
applicable law.
(b) Claims Initiated by Indemnified Person. To indemnify or make Expense Advances to
Indemnified Person with respect to Covered Events initiated or brought voluntarily by Indemnified
Person and not by way of defense, counterclaim or cross-claim, except (i) with respect to actions
or proceedings brought to establish or enforce a right to indemnification under this Agreement or
any other agreement or insurance policy or under Martek’s Certificate of Incorporation (all as now
or hereafter in effect) relating to a Claim, (ii) in specific cases if the Board of Directors
has approved the initiation or bringing of such Claim, or (iii) as otherwise required under
Section 145 of the DGCL.
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(c) Lack of Good Faith. To indemnify Indemnified Person for any Expenses incurred by
the Indemnified Person with respect to any action instituted (i) by Indemnified Person to enforce
or interpret this Agreement, if a court having jurisdiction over such action determines as provided
in Section 13 that each of the material assertions made by the Indemnified Person as a basis for
such action was not made in good faith or was frivolous, or (ii) by or in the name of Martek to
enforce or interpret this Agreement, if a court having jurisdiction over such action determines as
provided in Section 13 that each of the material defenses asserted by Indemnified Person in such
action was not made in good faith or was frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnified Person for Expenses and the
payment of profits arising from the purchase and sale by Indemnified Person of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar
successor statute.
11. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties and their respective successors, assigns
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all
or substantially all of the business or assets of Martek), spouses, domestic partners, heirs and
personal and legal representatives. Martek shall require and cause any successor (whether direct
or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially
all, or a substantial part, of the business or assets of Martek, by written agreement in form and
substance satisfactory to Indemnified Person, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Martek would be required to perform if no
such succession had taken place. This Agreement shall continue in effect until, and will terminate
upon, the later of: (a) ten (10) years after the date that Indemnified Person shall have ceased to
serve as [a Board Member] [director] [officer] [employee] [agent] or [fiduciary] of Martek or of
any other enterprises at Martek’s request, or (b) one (1) year after the final termination of any
Proceeding related to a Covered Event (including final termination of any appeal) or of any action
commenced by Indemnified Person and contemplated by Section 13 of this Agreement to enforce or
interpret any terms of this Agreement or any liability insurance policy maintained by Martek.
13. Expenses Incurred in Action Relating to Enforcement or Interpretation. In the
event that any action is instituted by Indemnified Person under this Agreement or under any
liability insurance policies maintained by Martek to enforce or interpret any of the terms hereof
or thereof, Indemnified Person shall be entitled to be indemnified for Expenses customarily and
reasonably incurred by Indemnified Person with respect to such action (including, without
limitation, reasonable attorneys’ fees), regardless of whether Indemnified Person is ultimately
successful in such action, unless as a part of such action a court having jurisdiction over such
action makes a final judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material assertions made by Indemnified Person as a basis for
such action was not made in good faith or was frivolous; provided, however, that until such final
judicial determination is made, Indemnified Person shall be entitled under Section 3 to receive
payment of Expense Advances with
respect to such action. In the event of an action instituted by or in the name of Martek
under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnified Person
shall be entitled to be indemnified for Expenses customarily and reasonably incurred by Indemnified
Person in defense of such action (including without limitation costs and expenses incurred with
respect to Indemnified Person’s counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final judicial
determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each
of the material defenses asserted by Indemnified Person in such action was not made in good faith
or was frivolous; provided, however, that until such final judicial determination is made,
Indemnified Person shall be entitled under Section 3 to receive payment of Expense Advances
hereunder with respect to such action.
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14. Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed
for by the party addressed, on the date of such delivery; (ii) if mailed by domestic certified or
registered mail with postage prepaid, on the third business day after the date postmarked; (iii) if
sent by third-party courier with delivery prepaid, on the next business day after shipment; or (iv)
if by electronic mail, on the next business day after shipment. Addresses for notice to either
party are as shown on the signature page of this Agreement, or as subsequently modified by written
notice.
15. Consent to Jurisdiction. Martek and Indemnified Person each hereby irrevocably
consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection
with any action or proceeding that arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be commenced, prosecuted and continued only in the
Delaware Court in and for New Castle County, which shall be the exclusive and only proper forum for
adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in the event
that any of the provisions (including any provision within a Section, paragraph or sentence) are
held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable; and the
remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore,
to the fullest extent possible, the provisions of this Agreement (including without limitation each
portion of this Agreement containing any provision held to be invalid, void or otherwise
unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or unenforceable.
17. Choice of Law. This Agreement, and all rights, remedies, liabilities, powers and
duties of the parties to this Agreement, shall be governed by and construed in accordance with the
laws of the State of Delaware as applied to contracts between Delaware residents entered into and
to be performed entirely in the State of Delaware without regard to principles of conflicts of
laws.
18. Subrogation. In the event of payment under this Agreement, Martek shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnified Person.
Indemnified Person agrees to execute all documents and to perform all acts that may be reasonably
necessary to secure such rights and to enable Martek effectively to bring suit to enforce such
rights.
19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed by both the
parties. No waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute a waiver of
any other provision (whether or not similar), nor shall such a waiver with respect to a
particular Claim constitute a continuing waiver applicable to any other Claim.
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20. Integration and Entire Agreement. This Agreement, together with the
indemnification provisions that may be included in the Company’s Certificate of Incorporation and
Bylaws, sets forth the entire understanding between the parties and supersedes and merges all
previous written and oral negotiations, commitments, understandings and agreements relating to the
subject matter hereof between the parties. To the extent of any conflict between the provisions of
the Company’s Certificate of Incorporation or Bylaws, on the one hand, and this Agreement, on the
other hand, the conflict shall be resolved in a manner that provides to Indemnified Person the
greater degree of indemnification for Expenses or Expense Advance, consistent with applicable law.
21. No Construction as Employment Agreement. Nothing contained in this Agreement
shall be construed as giving Indemnified Person any right to be retained in the employ of Martek or
any of its subsidiaries or affiliated entities.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the
date first above written.
| MARTEK BIOSCIENCES CORPORATION | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| Address: | ||||||||
| E-mail: | ||||||||
| AGREED TO AND ACCEPTED | ||||||||
| INDEMNIFIED PERSON: | ||||||||
| By: | ||||||||
| (Signature) | ||||||||
| Name: | ||||||||
| Address: | ||||||||
| E-mail: | ||||||||
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