INDEMNIFICATION AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (this “Agreement”)
is made as of this ___ day of ____, 200__, by and between CNS Response, Inc., a
Delaware corporation (the “Company”),
and ________, an individual (“Indemnitee”).
RECITALS
A. The
Company and Indemnitee recognize the substantial increase in corporate
litigation in general, subjecting directors, officers, employees, and agents to
expensive litigation risk at the same time that the availability and coverage of
liability insurance has been severely limited.
B. Indemnitee
does not regard the current protection available as adequate under the present
circumstances, and Indemnitee and other directors, officers, employers and
agents of the Company may not be willing to continue to serve as directors,
officers, employees and agents without additional protection.
C. The
Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve as directors, officers, employees and
agents of the Company and to indemnify its directors, officers, employees and
agents so as to provide them with the maximum protection permitted by
law.
AGREEMENT
The
Company and Indemnitee hereby agree as follows:
1. Agreement to
Serve. Indemnitee agrees to serve and/or continue to serve the
Company, at the Company’s will (or under separate written agreement approved by
the Board of Directors of the Company (the “Board”),
if such agreement exists), in the capacity Indemnitee currently serves the
Company, as long as Indemnitee is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or (subject to any employment agreement between
Indemnitee and the Company) until such time as Indemnitee, in his or her sole
discretion, tenders a written resignation or is removed in accordance with the
Bylaws; provided, however, that nothing
contained in this Agreement is intended to or shall create any right (express or
implied) to continued employment by Indemnitee.
2. Indemnification.
(a) Third Party Proceedings.
The Company shall indemnify Indemnitee if Indemnitee is or was a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason in whole or
in part of: (i) the fact that Indemnitee is or was a director, officer, employee
or agent of the Company, or any subsidiary of the Company, (ii) any action or
inaction on the part of Indemnitee while a director, officer, employee or agent
of the Company, or any subsidiary of the Company, or (iii) the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all expenses (including, without limitation,
attorneys’ fees, disbursements and retainers, accounting and witness fees,
travel and deposition costs, and expenses of investigations), judgments, fines
and amounts paid in settlement (if such settlement is approved in advance by the
Company which approval shall not be unreasonably withheld) and other amounts
actually incurred by Indemnitee in connection with such action, suit or
proceeding to the fullest extent permissible under Delaware Law as currently in
effect and as may be expanded in the future. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo
contendere or
its equivalent, shall not, of itself, create a presumption that indemnification
is unavailable under this Agreement.
(b) Proceedings by or in the Right of the
Company. The Company shall indemnify Indemnitee if Indemnitee was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company or any
subsidiary of the Company arising in whole or in part out of (i) the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
any subsidiary of the Company, (ii) any action or inaction on the
part of Indemnitee while a director, officer, employee or agent of the Company
or any subsidiary of the Company, or (iii) the fact that Indemnitee
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, without limitation, attorneys’ fees,
disbursements and retainers, accounting and witness fees, travel and deposition
costs, and expenses of investigations) and amounts paid in settlement, in each
case to the extent actually incurred by Indemnitee in connection with such
action, suit or proceeding, to the fullest extent permissible under Delaware Law
as currently in effect and as may be expanded in the future. For
purposes of this Section 2(b),
indemnification shall include, to the extent not prohibited by law,
indemnification against all judgments, fines and amounts paid in settlement
actually incurred by Indemnitee in connection with such action, suit or
proceeding.
(c) Mandatory Payment of
Expenses. Notwithstanding any limitations or conditions upon the
Company’s indemnification obligations set forth in Sections 2(a) and
(b) above, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 2(a) or
(b) or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including, without limitation, attorneys’ fees, disbursements
and retainers, accounting and witness fees, travel and deposition costs, and
expenses of investigations) actually incurred by Indemnitee in connection
therewith.
(d) Indemnification for Serving as a
Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s status as
a director, officer, employee or agent of the Company or any subsidiary of the
Company, a witness in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, Indemnitee shall be indemnified against
expenses actually incurred by Indemnitee in connection therewith.
2
3. Expenses; Indemnification
Procedure.
(a) Advancement of Expenses.
The Company shall advance all expenses incurred by Indemnitee in connection with
the investigation, defense, settlement or appeal of any civil, criminal,
administrative or investigative action, suit or proceeding referenced in Sections 2(a) or
(b)
hereof. Indemnitee hereby undertakes to repay such amounts advanced
only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to
Indemnitee within 30 days following delivery of a written request therefor by
Indemnitee to the Company.
(b) Notice/Cooperation by
Indemnitee. Indemnitee shall, as a condition precedent to his or
her right to be indemnified under this Agreement, give the Company notice, in
accordance with Section 15 hereof, of
any claim made against Indemnitee for which indemnification will or could be
sought under this Agreement. Notice to the Company shall be directed to
the Chief Executive Officer of the Company at the principal executive offices of
the Company. In addition, Indemnitee shall give the Company, at the
Company’s expense, such information and cooperation as it may reasonably require
and as shall be within Indemnitee’s power.
(c) Procedure. Any
indemnification and advances provided for in Section 2 and this
Section 3 shall
be made no later than 30 days after receipt of the written request of
Indemnitee. If a claim under this Agreement is not paid in full by the
Company within 30 days after a written request for payment therefor has first
been received by the Company, Indemnitee may, but need not, at any time
thereafter bring an action against the Company to recover the unpaid amount of
the claim and, subject to Section 14 of this
Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including attorneys’ fees) of bringing such action. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify
Indemnitee, but the burden of proving such defense shall be on the Company and
Indemnitee shall be entitled to receive interim payments of expenses pursuant to
Section 3(a)
unless and until such defense is finally adjudicated by court order or judgment
from which no further right of appeal exists. It is the intention of
the parties that if the Company contests Indemnitee’s right to indemnification
under this Agreement or applicable law, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the failure of the
Company (including its officers, its Board, any committee or subgroup of its
Board, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by this
Agreement or by applicable law, nor an actual determination by the Company
(including its officers, its Board, any committee or subgroup of its Board,
independent legal counsel, or its stockholders) that Indemnitee has not met such
applicable standard of conduct, shall create a presumption that Indemnitee has
not met the applicable standard of conduct.
3
(d) Notice to Insurers. If,
at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof,
the Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such
policies.
(e) Selection of Counsel. In
the event the Company shall be obligated under Section 3(a)
hereof to pay the expenses of any proceedings against Indemnitee, the Company,
if appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by Indemnitee, upon the delivery to Indemnitee of written
notice of its election so to do, provided, however, that (i) the Company shall
have no right to assume the defense of any claim, action or other matter which
seeks, in whole or in part, any remedy other than monetary damages (e.g.,
injunction, specific performance, criminal sanctions) or which could, if
Indemnitee were not to prevail therein, materially damage Indemnitee’s personal
or business reputation, and (ii) the Company shall have no right to assume the
defense of any claim, action or other matter unless the Company first agrees
fully and unconditionally, in writing, that the Company is obligated to
indemnify Indemnitee in full with respect thereto, and waives any and all
defenses, counterclaims or set-offs which might otherwise be asserted in
limitation or mitigation of such indemnification obligation. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ separate counsel in any such proceeding at
Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the
expense of the Company.
4. Additional Indemnification Rights;
Nonexclusivity.
(a) Scope. Notwithstanding
any other provision of this Agreement, in the event of any change in any
applicable law, statute or rule which narrows the right of the Company to
indemnify Indemnitee, 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 hereunder.
(b) Nonexclusivity. The
indemnification rights provided to Indemnitee by this Agreement shall be in
addition to, and not in lieu of, any rights to which Indemnitee may be entitled
under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested directors, applicable law or otherwise,
both as to action in Indemnitee’s official capacity and as to action in another
capacity while holding such office. The indemnification provided under
this Agreement shall continue as to Indemnitee with respect to (i) any
action taken or not taken while serving in an indemnified capacity and
(ii) any claim, action or other matter arising out of or relating to the
period prior to the date upon which Indemnitee ceased to serve in an indemnified
capacity, even though he may have ceased to serve in such capacity at the time
of any action, suit or other covered proceeding.
4
5. Partial Indemnification.
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 or penalties actually incurred by him in the investigation, defense,
appeal or settlement of any civil or criminal action, suit or proceeding, but
not, however, for the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion of such expenses, judgments, fines or
penalties to which Indemnitee is entitled.
6. Mutual Acknowledgment.
Both the Company and Indemnitee acknowledge that in certain instances, federal
or state law or regulation may prohibit the Company from indemnifying Indemnitee
under this Agreement or otherwise. Indemnitee understands and acknowledges
that the Company 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 the
Company’s right under law to indemnify Indemnitee. The Company agrees
to assert vigorously, in any such action pertaining to the Company’s right to
indemnify Indemnitee, the position that the Company has the full and unfettered
right to so indemnify Indemnitee, and further agrees that Indemnitee may, at any
time and in Indemnitee’s sole discretion, assume control of the Company’s
defense of such right (including without limitation selection of counsel and
determination of strategy), with such defense nonetheless being conducted at the
Company’s expense.
7. Liability Insurance. The
Company shall, from time to time, make the good faith determination whether or
not it is practicable for the Company to obtain and maintain a policy or
policies of insurance with reputable insurance companies providing the
directors, officers, employees and agents of the Company with coverage for
losses from wrongful acts, or to ensure the Company’s performance of its
indemnification obligations under this agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all such
policies of liability insurance, Indemnitee shall be named as an insured in such
a manner as to provide Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company’s directors, if Indemnitee is a
director; or of the Company’s officers, if Indemnitee is not a director of the
Company but is an officer; or of the Company’s employees, if Indemnitee is not a
director or officer but is an employee; or of the Company’s agents, if
Indemnitee is not a director, officer or employee but is an agent.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such
insurance is not reasonably available, if the premium costs for such insurance
are disproportionate to the amount of coverage provided, if the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.
8. Severability. Nothing in
this Agreement is intended to require or shall be construed as requiring the
Company to do or fail to do any act in violation of applicable law. The
Company’s inability, pursuant to law, regulation or court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided
in this Section
8. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this entire Agreement that shall not have been invalidated, and the
balance of this Agreement not so invalidated shall be enforceable in accordance
with its terms.
5
9.
Exceptions. Any
other provision herein to the contrary notwithstanding, the Company shall not be
obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by
Indemnitee. To indemnify or advance expenses to Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by Indemnitee
and not by way of defense, except with respect to proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or otherwise but such indemnification or advancement of expenses
may be provided by the Company in specific cases if the Board has approved the
initiation or bringing of such suit;
(b) Frivolous Proceedings.
To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to
any proceeding instituted by Indemnitee to enforce or interpret this Agreement,
if a court of competent jurisdiction determines that each of the material
assertions made by Indemnitee in such proceedings were frivolous;
(c) Insured Claims. To make
any payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise received payment (under any insurance policy, the
Certificate of Incorporation or Bylaws of the Company, contract or otherwise) of
the amounts otherwise indemnifiable hereunder. If the Company makes
any indemnification payment to Indemnitee in connection with any particular
expense indemnified hereunder and Indemnitee has already received or thereafter
receives, and is entitled to retain, duplicate payments in reimbursement of the
same particular expense, then Indemnitee shall reimburse the Company in an
amount equal to the lesser of (i) the amount of such duplicate payment and (ii)
the full amount of such indemnification payment made by the
Company;
(d) Claims Under Section
16(b). To indemnify Indemnitee for expenses and the payment of
profits arising from the purchase and sale by Indemnitee of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or any similar successor statute;
(e) Unlawful Claims. To
indemnify Indemnitee in any manner which a court of competent jurisdiction has
finally determined to be unlawful;
(f) Failure to Settle
Proceeding. In the event that Indemnitee Fails to Pursue a
Recommended Settlement of a Qualifying Claim, to indemnify Indemnitee (i) for
amounts paid or payable in settlement of such Qualifying Claim in excess of the
amount of such Recommended Settlement thereof, or (ii) for any cost and/or
expenses directly related to such Qualifying Claim incurred by Indemnitee
following the date upon which Indemnitee Fails To Pursue such Recommended
Settlement. For purposes of this clause, “Qualifying
Claim” shall mean any claim the defense of which may be assumed by the
Company under Section
3(e) above (i.e., any claim that (A) is not described in the first clause
(i) of said Section
3(e) and (B) with respect to which the Company has acknowledged its
unconditional duty to indemnify as described in first clause (ii) of said
Section 3(e)),
“Recommended
Settlement” shall mean a reasonable written settlement proposal, in full
and final executable form in all material respects, and “Fails To
Pursue” shall mean either (i) Indemnitee’s failure to communicate a
Recommended Settlement to the principal adverse party in the subject matter
within 30 days after Indemnitee’ receipt thereof from the Company, or
(ii) Indemnitee’s failure to agree to any Recommended Settlement that has
been accepted by all adverse parties in the subject matter within 30 days after
receipt thereof, provided the Company has (A) irrevocably deposited all
funds necessary to satisfy all of Indemnitee’s obligations under such
Recommended Settlement in an account subject to Indemnitee’s or a third party’s
control and (B) irrevocably taken all actions and given all instructions
necessary or appropriate to permit such funds to be applied in satisfaction of
such obligations of Indemnitee.
6
(g) Breach of Employment
Agreement. To indemnify Indemnitee for any breach by
Indemnitee of any employment agreement between Indemnitee and the Company or any
of its subsidiaries.
10. Legal Fees. The
Company agrees to pay or reimburse Indemnitee for Indemnitee’s legal fees and
costs incurred in connection with the preparation and negotiation of this
Agreement.
11. Construction of Certain
Phrases.
For
purposes of this Agreement, references to the “Company” shall include, in
addition to the resulting corporation, any constituent corporation (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, employees and/or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
For
purposes of this Agreement, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; and references
to “serving at the request of the Company” shall include any service as a
director, officer, employee or agent of the Company or any subsidiary of the
Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries.
12. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
13. Successors and Assigns.
This Agreement shall be binding upon the Company and its successors and assigns,
and shall inure to the benefit of Indemnitee and Indemnitee’s estate, heirs,
legal representatives and assigns.
7
14. Attorneys’ Fees. In the
event that any action is instituted by Indemnitee under this Agreement to
enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be
paid all court costs and expenses, including reasonable attorneys’ fees,
incurred by Indemnitee with respect to such action, unless as a part of such
action, the court of competent jurisdiction determines that each of the material
assertions made by Indemnitee as a basis for such action were frivolous.
In the event of an action instituted by or in the name of the Company under this
Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee
shall be entitled to be paid all court costs and expenses, including attorneys’
fees, incurred by Indemnitee in defense of such action (including with respect
to Indemnitee’s counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of Indemnitee’s material
defenses to such action were frivolous.
15. Notice. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written 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 receipted for by
the party addressee, on the date of such receipt, or (ii) if mailed by
domestic certified or registered mail with postage prepaid, on the third
business day after the date postmarked if addressed as provided for on the
signature page of this Agreement, unless sooner received, or as subsequently
modified by written notice.
16. Consent to Jurisdiction.
The Company and Indemnitee each hereby irrevocably consent to the jurisdiction
of the courts of the State of California for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only in the
state courts of the State of California, or in federal courts located in such
State.
17. Choice of Law. This
Agreement shall be governed by and its provisions construed in accordance with
the laws of the State of Delaware.
8
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
|
a
Delaware corporation, as the Company
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
Notice
Address:
|
|||
|
AGREED
TO AND ACCEPTED:
|
|||
|
INDEMNITEE:
|
|||
|
(Signature)
|
|||
|
(Print
Name)
|
|||
|
Notice
Address:
|
|||
9
