Contract
INDEMNIFICATION
AGREEMENT (“Agreement”) effective
as of September 10, 2010 between DISCOVERY LABORATORIES, INC., a Delaware
corporation (the “Company”), and XXXXX
X. XXXXXXX (“Indemnitee”).
The Company desires to attract and
retain the services of highly qualified individuals, such as Indemnitee, to
serve the Company and to do so free from undue concerns for claims or damages
arising out of or related to such service to the Company.
In order to induce Indemnitee to
continue to provide services to the Company, the Company wishes to provide for
the indemnification of, and the advancement of related expenses to, Indemnitee
to the maximum extent permitted by law.
Section 145 of the General Corporation
Law of the State of Delaware (the “DGCL”) empowers the
Company to indemnify its directors, officers, employees and agents by agreement
and to indemnify persons who serve, at the request of the Company, as the
directors, officers, employees or agents of other corporations or enterprises,
and expressly provides that the indemnification provided by Section 145 is not
exclusive.
The Company and Indemnitee recognize
the substantial increase in corporate litigation in general, subjecting
directors, officers, employees, agents and fiduciaries to expensive litigation
risks at the same time as the availability and coverage of liability insurance
has been severely limited.
The Board of Directors of the Company
has determined that not only is it reasonable and prudent but necessary to
promote the best interests of the Company and its stockholders that the
Indemnitee be indemnified and advanced expenses as set forth
herein.
Accordingly,
the Company and Indemnitee hereby agree as follows:
Section 1. Certain
Definitions.
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a.
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“Board” shall
mean the Board of Directors of the
Company.
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b. “Change in Control”
shall mean, and shall be deemed to have occurred if, on or after the date of
this Agreement, (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company acting in such capacity or a corporation owned
directly or indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company, becomes the
“beneficial owner” (as defined in Rule 13d-3 as promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 50% of the total voting power represented by the Company’s then outstanding
Voting Securities, (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new director
whose election by the Board or nomination for election by the Company’s
Shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, (iii) a merger or
consolidation of the Company is consummated with any other corporation other
than a merger or consolidation which would result in the Voting Securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 60% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (iv) the Shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company’s
assets.
c. “Claim” shall mean
with respect to a Covered Event: any loss, damage or liability, or any
threatened, pending or completed action, suit, proceeding, arbitration or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, regulatory,
investigative or other.
d. “Covered Event” shall
mean any event or occurrence directly or indirectly related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
e. “Expenses” shall mean
any and all reasonable expenses (including attorneys’ fees and all other costs,
expenses and obligations actually incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, to be a witness in or to participate in, any action, suit,
proceeding, alternative dispute resolution mechanism, hearing, inquiry or
investigation), judgments, fines, penalties and amounts paid in settlement (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) of, or in connection with, any Claim in which
Indemnitee is or is threatened to be a party, and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement.
f. “Expense Advance”
shall mean a payment to Indemnitee, pursuant to Section 2(e), of Expenses in
advance of the settlement of or final judgment of any Claim.
g. “Independent Legal
Counsel” shall mean an attorney or firm of attorneys, selected in
accordance with Section 3(a), who shall not have otherwise performed services
for the Company or Indemnitee within the last three years of the applicable
Covered Event (other than with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other Indemnitees under similar indemnity
agreements).
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h. References
to “other
enterprises” shall include employee benefit plans; references to “fines” shall include,
without limitation, 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, without limitation, any service as a
director, officer, employee, agent or fiduciary of the Company which imposes
duties on, or involves services by, such director, officer, employee, agent or
fiduciary with respect to an employee benefit plan, its participants or its
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner “not opposed to
the best interests of the Company” as referred to in this
Agreement.
i. “Reviewing Party”
shall mean any person or body appointed by the Board pursuant to Section 3(a)
and in accordance with applicable law, which shall include (i) a majority of the
members of the Board that are not parties to the Claim, (ii) a committee of such
members of the Board, (iii) Independent Legal Counsel by way of a written
opinion or (iv) the stockholders of the Company.
j. “Section” refers to a
Section of this Agreement unless otherwise indicated.
k. “Voting Securities”
shall mean any securities of the Company of which, the holders of such
securities vote generally in the election of directors.
Section 2. Indemnification.
a. Indemnity in Third Party
Proceeding. The Company shall indemnify the Indemnitee if the
Indemnitee is a party to, or threatened to be made a party to or otherwise
involved in any Claim against any and all Expenses actually and reasonably
incurred by him in connection with such Claim, but only if the Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was
unlawful.
b. Indemnity in Derivative
Actions. The Company shall indemnify the Indemnitee if the
Indemnitee is a party to, or threatened to be made a party to or otherwise
involved in any Claim by or in the right of the Company to procure a judgment in
its favor against any and all Expenses actually and reasonably incurred by the
Indemnitee in connection with such Claim, but only if the Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company, except that no indemnification under this Section
2(b) shall be made in respect of any Claim as to which the Indemnitee shall have
been finally adjudged to be liable to the Company by a court of competent
jurisdiction for gross negligence or willful misconduct in the performance of
its duty to the Company, unless and only to the extent that any court in which
such claim was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnification for such Expenses as
such court shall deem proper.
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c. Indemnification as
Witness. Notwithstanding any other provisions of this
Agreement, to the extent that Indemnitee is involved in any investigative
proceeding in connection with Indemnitee’s service to the Company, including but
not limited to testifying as a witness or furnishing documents in response to a
subpoena or otherwise, the Indemnitee shall be indemnified for any and all
Expenses actually and reasonably incurred by or for him in connection
therewith.
d. Partial
Idemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses actually and reasonably incurred by him in connection
with a Claim but is not entitled, however, to indemnification for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for the
portion thereof to which the Indemnitee is entitled.
e. Advancement of
Expenses. Subject to Sections 3, 4(a) and 10(b), the Company
shall provide Indemnitee with Expense Advances from time to time in order to
account for all Expenses.
f. Mandatory Payment of
Expenses. Notwithstanding any other provision of this
Agreement other than Sections 4(d) and 9, to the extent that Indemnitee has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any Claim (as to which
all rights of appeal therefrom have been exhausted or lapsed), Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.
Section 3. Review
a. Selection of Reviewing
Party. Within 30 days of receipt of written notice by the
Company of Indemnitee’s notice of the existence of a Claim pursuant to Section
4(b), the Board shall appoint a Reviewing Party, the function of which shall be
to review the Company’s obligations hereunder or under any other agreement or
under the Company’s Articles of Incorporation or Bylaws as now or hereafter in
effect, or under any other applicable law (the “Operative
Materials”); provided, however, that if
there has been a Change in Control (other than a Change in Control which has
been approved by a majority of the directors of the Board who were directors
immediately prior to such Change in Control), a majority of the directors of the
Board that are not parties to the Claim may direct that the Reviewing Party
shall be an Independent Legal Counsel selected by Indemnitee (subject to the
last sentence of this Section 3(a)) and approved by the Company (which approval
shall not be unreasonably withheld).
Such
Independent Legal Counsel, among other things, shall render its written opinion
to the Company and Indemnitee as to whether and to what extent Indemnitee is
entitled to be indemnified under the Operative Materials, and the Company hereby
agrees to abide by such opinion. The Company agrees to pay the
reasonable fees and expenses of the Independent Legal Counsel referred to above
and to indemnify fully such Independent Legal Counsel against any and all
reasonable expenses (including reasonable attorneys’ fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this
Agreement, the Company shall not be required to pay the fees and expenses of
more than one Independent Legal Counsel in connection with all matters
concerning a single Indemnitee, and such Independent Legal Counsel shall be the
Independent Legal Counsel for any or all other Indemnitees unless (i) the
selection of separate counsel by one or more Indemnitees has been previously
authorized by the Company in writing, or (ii) an Indemnitee shall have provided
to the Company a written statement that such Indemnitee has reasonably concluded
in good faith that there may be a conflict of interest between such Indemnitee
and the other Indemnitees with respect to the matters arising under this
Agreement.
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b. Non-indemnifiable
Determination; Repayment Obligation. Notwithstanding anything
to the contrary in this Agreement, in the event that (i) any Reviewing Party
shall determine that Indemnitee is not entitled to indemnification for Expenses
under the Operative Materials or (ii) it shall ultimately be determined in a
final, non-appealable judgment that the Indemnitee is not entitled to be
indemnified by the Company or that Indemnitee did not act in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal proceeding, had no
reasonable cause to believe his conduct was lawful or (iii) that the Company is
prohibited from indemnifying Indemnitee pursuant to Sections 4(h) or 7, (x) the
Company shall have no further obligation to make any payments to or on behalf of
Indemnitee pursuant to this Agreement, and (y) the Company shall as promptly as
practicable be reimbursed by Indemnitee for all Expenses and/or Expense Advances
theretofore paid to or on behalf of Indemnitee. In furtherance of
Indemnitee’s obligation to reimburse the Company pursuant to the immediately
preceding sentence, as a condition to the payment of any Expenses and/or Expense
Advances, the Indemnitee shall provide the Company with reasonable assurance of
the repayment of such Expenses and/or Expense Advances including, but not
limited to, an indemnity bond, letter-of-credit, secured promissory note, or
deposit into an escrow account as shall be required by the Company in its good
faith discretion.
c. Indemnitee’s Right to
Challenge Review; Binding Effect. If any Reviewing Party
determines that Indemnitee is not entitled to be indemnified hereunder in whole
or in part under the Operative Materials, Indemnitee shall have the right to
challenge such determination within 90 days of the determination by the
Reviewing Party, in accordance with Section 8. In such case, any
determination made by any Reviewing Party that Indemnitee is not entitled to
indemnification and/or Expense Advances under the Operative Materials shall not
be binding, and Indemnitee shall not be required to reimburse the Company for
any Expenses and/or Expense Advances theretofore paid to or on behalf of
Indemnitee until a final determination is made with respect thereto (as to which
all rights of appeal therefrom have been exhausted or lapsed). Absent
such challenge, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
Section 4. Procedures for
Indemnification and Expense Advances.
a. Demand for Payment; Timing
of Payments. All payments of Expenses (including, without
limitation, Expense Advances) by the Company to or on the behalf of the
Indemnitee pursuant to this Agreement shall be made to the fullest extent
permitted by law as soon as practicable after written demand by Indemnitee
therefor is presented to the Company, but in no event later than 30 business
days after such written demand by Indemnitee is presented to the Company, except
in the case of Expense Advances, which shall be made no later than 10 business
days after such written demand by Indemnitee is presented to the
Company. In the case of a written demand for Expense Advances, such
demand will include an affidavit from Indemnitee’s counsel as to the
reasonableness of such Expense Advance, which affidavit will be conclusive proof
for all purposes that such Expense Advance is reasonable.
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b. Notice/Cooperation by
Indemnitee. Indemnitee shall, as a condition precedent to
Indemnitee’s right to be indemnified or to receive Expense Advances under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made, or to Indemnitee’s knowledge, threatened against Indemnitee for
which indemnification will or could be sought under this Agreement; provided, however, that
Indemnitee’s failure to provide notice in connection with such a threatened
Claim shall not affect Indemnitee’s right to any such indemnification or Expense
Advances unless such failure prejudiced the direct or indirect rights of the
Company. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall promptly give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee’s power.
c. No Presumptions; Burden of
Proof. For purposes of this Agreement, the termination of any
Claim in a manner adverse to Indemnitee, either by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, by itself, create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that indemnification is not permitted by this Agreement or
the Operative Materials, unless there has been a specific finding of fact,
conclusion of law or an admission by Indemnitee as part of the termination of
such Claim with respect to such standard of conduct, belief or permissibility of
indemnification. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of proceedings
by Indemnitee pursuant to Section 3(a) to secure a determination that Indemnitee
should be indemnified under this Agreement under the Operative Materials, shall
be a defense to Indemnitee’s claim or create a presumption that Indemnitee 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 Indemnitee is entitled to be indemnified
hereunder under the Operative Materials, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
d. Notice to
Insurers. If, at the time of the receipt by the Company of a
notice of a Claim pursuant to Section 4(b), the Company has liability insurance
which may cover such Claim, the Company shall give prompt notice of the
commencement of such Claim to the insurers in accordance with the procedures set
forth in the applicable policy or policies. The Company shall
thereafter take all necessary or desirable actions to cause such insurers to pay
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policy or policies.
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e. Selection of
Counsel. In the event the Company shall be obligated hereunder
to provide indemnification for, or make any Expense Advances with respect to,
any Claim, the Company, if appropriate, shall be entitled to assume the defense
of such Claim with counsel approved by Indemnitee (which approval shall not be
unreasonably withheld) upon the delivery to Indemnitee of written notice of the
Company’s election to do so. 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
or expenses of separate counsel subsequently retained by or on behalf of
Indemnitee with respect to the same Claim; provided, that (i)
Indemnitee shall have the right to employ separate counsel for any such Claim at
Indemnitee’s expense and (ii) if (A) the employment of separate counsel by
Indemnitee has been previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded, and has provided the Company with the written opinion
of counsel reasonably acceptable to the Company to the effect, 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 continue to retain counsel to defend
such Claim, then the reasonable fees and expenses of Indemnitee’s separate
counsel shall be Expenses for which Indemnitee may receive indemnification
and/or Expense Advances hereunder.
f. Expenses Incurred in Action
Relating to Enforcement or Interpretation. In the event that
any action is instituted by Indemnitee under this Agreement including, but not
limited to, a proceeding described in Sections 3 or 8 or under any liability
insurance policies maintained by the Company, to enforce or interpret any of the
terms hereof or thereof, Indemnitee shall be entitled to be indemnified for all
Expenses actually and reasonably incurred by Indemnitee with respect to such
action only if Indemnitee is ultimately successful in any such action; provided, however, that until
such final determination is made, Indemnitee shall be entitled to receive
payment of Expense Advances hereunder (and may be obligated to repay such
Expense Advances) with respect to such action as provided in, and subject to,
Section 2(e). 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 indemnified for all Expenses
incurred by Indemnitee in defense of such action (including, without limitation,
reasonable costs and expenses incurred with respect to Indemnitee’s
counterclaims and cross-claims made in such action) only if Indemnitee is
ultimately successful in any such action; provided, however, that until a
final determination is made in such action, Indemnitee shall be entitled to
receive payment of Expense Advances hereunder (and may be obligated to repay
such Expense Advances) with respect to such action as provided in Section
2(e).
Section 5. Additional Indemnification
Rights; Nonexclusivity.
a. Scope. The
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification may not be
specifically authorized by the Operative Materials. In the event of
any change after the date of this Agreement in any applicable law, statute or
rule which expands the right of a Delaware corporation to indemnify a director,
officer, employee, agent or fiduciary, it is the intent of the parties hereto
that Indemnitee 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 which narrows the right of a Delaware corporation to indemnify a
director, officer, employee, agent or fiduciary, the Indemnitee’s rights
hereunder shall be narrowed accordingly, but only to the extent required by such
law, statute or rule, and otherwise shall have no effect on this Agreement or
the parties’ rights and obligations hereunder.
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b. Nonexclusivity. The
indemnification and the payment of Expense Advances provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company’s Certificate of Incorporation, its Bylaws, any other agreement, any
vote of shareholders or disinterested directors, the DGCL or
otherwise.
Section
6. No Duplication of
Payments. The Company shall 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, provision of the Company’s Restated Certificate of Incorporation, Bylaws
or otherwise) of the amounts otherwise payable hereunder.
Section
7. Mutual
Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee
acknowledges that the Company has undertaken, or, in the future, the Securities
and Exchange Commission (the “Commission”) may
require the Company to undertake, to submit the question of indemnification to a
court in certain circumstances for a determination of the Company’s right under
public policy to indemnify Indemnitee. Indemnitee acknowledges and
agrees that if, and to the extent that, indemnification is so prohibited in the
written opinion of counsel to the Company, then the Company shall be relieved
from any obligation that would cause the Company to violate any such laws or
policies.
Section
8. Arbitration.
a. Any
and all claims, disputes or controversies (“Disputes”) arising under, out of, in
connection with, or in relation to this Agreement shall be arbitrated in
accordance with the terms and conditions of this Section 8; provided, that
notwithstanding the above, either party may apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable
harm.
b. As
a condition precedent to a party’s right to commence an arbitration pursuant to
this Section 8, if a party in its sole discretion feels that a Dispute is
unlikely to be resolved amicably by good faith negotiations between the parties,
that party shall send written notice of the issues(s) in dispute, clearly marked
“Dispute Notice”, to the other party, demanding that the Dispute be settled by
binding arbitration in accordance with this provision. The parties
shall have 30 days from the date of receipt of the Dispute Notice to attempt a
resolution of the Dispute by negotiations between their senior officials or
representatives authorized to bind such parties.
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c. If
within 30 days of receipt of the Dispute Notice, the Dispute has not been
resolved, either party may require the matter to be settled by final and binding
arbitration by sending written notice of such election to the other party
clearly marked “Arbitration Demand.” Nothing contained herein shall
operate to prevent either party from asserting counterclaim(s) in any
arbitration commenced in accordance with this agreement, without need to comply
with the procedural provisions of Section 8(b) and this Section
8(c).
d. The
arbitration shall be filed with the office of the American Arbitration
Association (“AAA”) located in New York, NY, or such other AAA office as the
parties may agree upon (without any obligation to so agree). The
arbitration shall be conducted pursuant to the Commercial Arbitration Rules of
AAA. In addition, the following rules and procedures shall apply to
the arbitration:
1. The
arbitral shall consist of three arbitrators. Each party shall
nominate one arbitrator in the Arbitration Demand and the answer thereto, and
the two arbitrators so named will then jointly appoint the third arbitrator as
chairman of the arbitration tribunal within 10 days. If the two
arbitrators selected by the parties shall be unable to agree upon a third
arbitrator within such 10-day period, the third arbitrator shall be chosen in
accordance with the Commercial Arbitration Rules of AAA. The third
arbitrator shall have reasonable experience in the matter under
dispute.
2. The
administrative fee of AAA and the compensation and all other costs and expenses
(the “Costs”) of the arbitrators will be paid by the losing party of the
proceeding.
3. The
arbitrators shall have the sole authority to decide whether or not any Dispute
between the parties is arbitrable.
4. The
decision of the arbitrators, which shall be in writing and state the finding of
facts and conclusions of law upon which the decision is based, shall be final
and binding upon the parties, who shall carry forth and comply with such
decision promptly after receipt thereof. Judgment upon the award
rendered by the arbitrators may be entered by any competent
court. Each party submits itself to the jurisdiction of the courts of
the State of New York, but only for the entry and enforcement of judgment with
respect to the decision of the arbitrators hereunder.
5. The
arbitrators shall have the power to grant legal and equitable remedies
(including, without limitation, specific performance) and award compensatory
damages provided by applicable law, but shall not have the power or authority to
award punitive damages. No party shall seek punitive damages relating
to any matter under, arising out of, or in connection with or relating to this
Agreement in any other forum.
e. Except
as provided in Section 8(a), the provisions of this Section 8 shall be a
complete defense to any suit, action or proceeding instituted in any federal,
state or local court or before any administrative tribunal with respect to any
Dispute arising with regard to this Agreement. Any party commencing a
lawsuit in violation of this Section 8 shall pay the costs of the other party,
including, without limitation, reasonable attorney’s fees and defense costs;
provided, however, this Section
8 shall not apply if, and to the extent that, it is inconsistent with an
undertaking given by the Company (including an undertaking given after the date
of this Agreement) to the Commission to submit to a court of competent
jurisdiction the question whether indemnification by the Company for liabilities
under the Securities Act of 1933 (the “Securities Act”), is
against public policy as expressed in the Securities Act, and to be governed by
the final adjudication of such issue. In such case, the determination
by such court shall be deemed, for purposes of this Agreement, to be a
determination pursuant to Section 8.
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Section
9. Liability
Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided 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 key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or
fiduciary.
Section
10. Exceptions. Notwithstanding
any other provision of this Agreement, the Company shall not be obligated
pursuant to the terms of this Agreement:
a. Excluded Action or
Omissions. To indemnify or make Expense Advances to Indemnitee
with respect to Claims arising out of acts, omissions or transactions for which
Indemnitee is prohibited from receiving indemnification under applicable
law.
b. Claims Initiated by
Indemnitee. To indemnify or make Expense Advances to
Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee
and not by way of defense, counterclaim or cross-claim, except (i) with respect
to actions or proceedings brought pursuant to Sections 3 and 8 to establish or
enforce a right to indemnification or Expense Advances under this Agreement or
any other agreement or insurance policy or under the Company’s Restated
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Covered Events (but in each case, only to the extent permitted by
Section 8), (ii) in specific cases if the Board has approved the initiation or
bringing of such Claim or (iii) as otherwise required under Section 145 of the
DGCL.
c. 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 Exchange Act, or any similar successor
statute.
Section 11. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
Section 12. Binding Effect; Successors
and Assigns. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto 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 the Company), spouses, heirs and personal and legal
representatives. The Company 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 the Company, by written 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 that the Company would be required to perform
if no such succession had taken place. This Agreement shall continue
in effect regardless of whether Indemnitee continues to serve as a director,
officer, employee, agent or fiduciary (as applicable) of the Company or of any
other enterprise at the Company’s request.
10
Section 13. Period of
Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee’s estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
Section 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, or (ii) if mailed by
domestic certified or registered mail with postage prepaid, on the third
business day after the date postmarked. Addresses for notice to
either party are as shown on the signature page of this Agreement, or as
subsequently modified by written notice.
Section 15. Consent to
Jurisdiction. Subject to Section 8, the Company and Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of New York 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 commenced, prosecuted and continued only in the
state courts of the State of New York, which shall be the exclusive and only
proper forum for adjudicating such a claim.
Section 16. Severability. The
provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single 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.
Section 17. Choice of
Law. Other than the provisions relating to indemnification of
directors, officers, employees and agents contained in the DGCL and the
Securities Act with respect to Delaware corporations and the sale of securities
respectively, 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 New York as applied to contracts
between New York residents entered into and to be performed entirely in the
State of New York without regard to principles of conflicts of laws of such
State.
11
Section 18. Subrogation. In
the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.
Section 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 hereto. No waiver of any of the provisions of
this Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
Section 20. Integration and Entire
Agreement. This Agreement sets forth the entire understanding
between the parties hereto and supersedes and merges all previous written and
oral negotiations, commitments, understandings and agreements relating to the
subject matter hereof between the parties hereto.
Section 21. No Construction as
Employment Agreement. Nothing contained in this Agreement
shall be construed as giving Indemnitee any right to be retained in the employ
of the Company or any of its subsidiaries or affiliated entities.
Section 22. Right to
Set-Off. In the event that the Company is obligated to make
any payment to Indemnitee (other than Expense Advances) pursuant to this
Agreement and Indemnitee is indebted to the Company for any reason whatsoever,
the Company may set-off from such payments any amount owed to the
Company.
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IN WITNESS WHEREOF, the parties hereto
have executed this Indemnification Agreement as of the date first above
written.
| DISCOVERY LABORATORIES, INC. | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxx | |
| Name: Xxxxx X. Xxxxx, Attorney at Law | |||
|
Title:
Executive Vice President, General Counsel
|
|||
| 2600 Xxxxx Xx., Suite 100 | |||
| Warrington, PA 18976 | |||
| INDEMNITEE: | |||
| /s/ Xxxxx X. Xxxxxxx | |||
| Name: Xxxxx X. Xxxxxxx | |||
| 142 Tannery Run Circle | |||
| Berwyn, PA 19302 | |||
