INDEMNITY AGREEMENT
EXHIBIT
10.2
This
indemnity agreement dated as of February 26, 2007 is between Denali Sciences,
Inc., a Delaware corporation (“Denali”),
Velcera Pharmaceuticals, Inc., a Delaware corporation (“Velcera”
and
together with Denali, the “Companies”),
and
Xxxxxxx X. Xxxxx (the “Indemnitee”),
Indemnitee
is the sole director of Denali and is willing to serve, continue to serve and
to
take on additional service for or on behalf of Denali on the condition that
he
is indemnified as provided herein; and
It
is
intended that the Companies will promptly pay Indemnitee all amounts necessary
to effectuate in full the indemnity provided herein.
The
parties hereto agree as follows:
1. Services
by Indemnitee.
Indemnitee agrees to serve as director of Denali, so long as Indemnitee is
duly
appointed or elected and qualified in accordance with the applicable provisions
of Denali’s certificate of incorporation and bylaws, and until such time as
Indemnitee resigns or fails to stand for election or is removed as director.
2. Indemnification.
Subject
to the limitations set forth herein and in Section 6 hereof, the Companies
hereby agree to indemnify Indemnitee as follows:
The
Companies shall, with respect to any Proceeding (as hereinafter defined)
associated with Indemnitee acting in his official capacity as director of Denali
relating to the consideration, approval or consummation of that
certain
Merger
Agreement
dated
January 31, 2007 between Velcera, Denali and Denali Acquisition Corp. (the
“Merger”),
indemnify Indemnitee to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware (the “DGCL”)
and
the certificate of incorporation of Denali in effect on the date hereof or
as
such law or certificate of incorporation may from time to time be amended (but,
in the case of any such amendment, only to the extent such amendment permits
Denali to provide broader indemnification rights than the law or Certificate
of
Incorporation permitted Denali to provide before such amendment).
Notwithstanding the foregoing, the Companies shall not be required to indemnify
Indemnitee for acts or omissions of Indemnitee constituting bad faith, gross
negligence or intentional misconduct, except for actual or alleged gross
negligence in connection with the scope or depth of the performance of due
diligence with respect to Velcera and its business. The right to indemnification
conferred herein and in the certificate of incorporation of Denali shall be
presumed to have been relied upon by Indemnitee in serving or continuing to
serve Denali and shall be enforceable as a contract right. Without in any way
diminishing the scope of the indemnification provided by this Section 2, the
Companies will indemnify Indemnitee against Expenses (as hereinafter defined)
and Liabilities (as hereinafter defined) actually and reasonably incurred by
Indemnitee or on his behalf in connection with the investigation, defense,
settlement or appeal of such Proceeding. In addition to, and not as a limitation
of, the foregoing, the rights of indemnification of Indemnitee provided under
this agreement shall include those rights set forth in Sections 7 below.
Notwithstanding the foregoing, the Companies shall be required to indemnify
Indemnitee in connection with a Proceeding commenced by Indemnitee (other than
a
Proceeding commenced by Indemnitee to enforce Indemnitee’ rights under this
agreement) only if the commencement of such Proceeding was authorized by the
Board of Directors. Notwithstanding anything to the contrary contained herein,
the Companies shall have no obligation to indemnify Indemnitee to the extent
such indemnification would not be permitted under Section 145 of the DGCL or
Denali’s certificate of incorporation in effect on the date hereof.
3. Presumptions
and Effect of Certain Proceedings.
Upon
making a request for indemnification, Indemnitee shall be presumed to be
entitled to indemnification under this agreement and the Companies shall have
the burden of proof to overcome that presumption in reaching any contrary
determination. The termination of any Proceeding by judgment, order, settlement,
arbitration award or conviction, or upon a plea of nolo contendere or its
equivalent shall not affect this presumption or, except as determined by a
judgment or other final adjudication adverse to Indemnitee, establish a
presumption with regard to any factual matter relevant to determining
Indemnitee’s rights to indemnification hereunder. If the person or persons so
empowered to make a determination pursuant to Section 4 hereof shall have failed
to make the requested determination within ninety (90) days after any judgment,
order, settlement, dismissal, arbitration award, conviction, acceptance of
a
plea of nolo contendere or its equivalent, or other disposition or partial
disposition of any Proceeding or any other event that could enable the Companies
to determine Indemnitee’s entitlement to indemnification, the requisite
determination that Indemnitee is entitled to indemnification shall be deemed
to
have been made.
4. Procedure
for Determination of Entitlement to Indemnification.
(a) Whenever
Indemnitee believes that Indemnitee is entitled to indemnification pursuant
to
this agreement, Indemnitee shall submit a written request for indemnification
to
the Companies. Any request for indemnification shall include sufficient
documentation or information reasonably available to Indemnitee for the
determination of entitlement to indemnification. In any event, Indemnitee shall
submit Indemnitee’s claim for indemnification within a reasonable time, not to
exceed ninety (90) days after any judgment, order, settlement, dismissal,
arbitration award, conviction, acceptance of a plea of nolo contendere or its
equivalent, or final termination, whichever is the later date for which
Indemnitee requests indemnification.
(b) Independent
Legal Counsel (as hereinafter defined) shall determine whether Indemnitee is
entitled to indemnification. Determination of Indemnitee’s entitlement to
indemnification shall be made not later than ninety (90) days after the
Companies’ receipt of Indemnitee’s written request for such indemnification,
provided that any request for indemnification for Liabilities, other than
amounts paid in settlement, shall have been made after a determination thereof
in a Proceeding.
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5. Specific
Limitations on Indemnification.
Notwithstanding anything in this agreement to the contrary, the Companies shall
not be obligated under this agreement to make any payment to Indemnitee with
respect to any Proceeding:
(a) To
the
extent that payment is actually made to Indemnitee under any insurance policy,
or is made to Indemnitee by either of the Companies or affiliates otherwise
than
pursuant to this agreement. Notwithstanding the availability of such insurance,
Indemnitee also may claim indemnification from the Companies pursuant to this
agreement by assigning to the Companies any claims under such insurance to
the
extent Indemnitee is paid by the Companies;
(b) For
Liabilities in connection with Proceedings settled without the Companies’
consent, which consent, however, shall not be unreasonably withheld;
(c) In
no
event shall the Companies be liable to pay the fees and disbursements of more
than one counsel in any single Proceeding except to the extent that, in the
opinion of counsel of the Indemnitee, the Indemnitee have conflicting interests
in the outcome of such Proceeding, or
(d) To
the
extent it would be otherwise prohibited by law, if so established by a judgment
or other final adjudication adverse to Indemnitee.
6. Fees
and Expenses of Independent Legal Counsel.
The
Companies agree to pay the reasonable fees and expenses of Independent Legal
Counsel and to fully indemnify such Independent Legal Counsel against any and
all expenses and losses incurred by any of them arising out of or relating
to
this agreement or their engagement pursuant hereto.
7. Remedies
of Indemnitee.
(a) In
the
event that (i) a determination pursuant to Section 4 hereof is made that
Indemnitee is not entitled to indemnification, (ii) payment has not been timely
made following a determination of entitlement to indemnification pursuant to
this agreement, or (iii) Indemnitee otherwise seeks enforcement of this
agreement, Indemnitee shall be entitled to a final adjudication in the Court
of
Chancery of the State of Delaware of the remedy sought.
(b) If
a
determination that Indemnitee is entitled to indemnification has been made
pursuant to Section 4 hereof, or is deemed to have been made pursuant to Section
4 hereof or otherwise pursuant to the terms of this agreement, the Companies
shall be bound by such determination in the absence of a misrepresentation
or
omission of a material fact by Indemnitee in connection with such determination.
(c) The
Companies shall be precluded from asserting that the procedures and presumptions
of this agreement are not valid, binding and enforceable. The Companies shall
stipulate in any such court or before any such arbitrator that the Companies
are
bound by all the provisions of this agreement and are precluded from making
any
assertion to the contrary.
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(d) Expenses
reasonably incurred by Indemnitee in connection with Indemnitee’s request for
indemnification under, seeking enforcement of or to recover damages for breach
of this agreement shall be borne by the Companies when and as incurred by
Indemnitee.
8. Contribution.
To the
fullest extent permissible under applicable law, if the indemnification provided
for in this agreement is unavailable to Indemnitee for any reason whatsoever,
the Companies, in lieu of indemnifying Indemnitee, shall contribute to the
amount incurred by Indemnitee, whether for judgments, fines, penalties, excise
taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
agreement, in such proportion as is deemed fair and reasonable in light of
all
of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Companies and Indemnitee as a result of the event(s)
and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative
fault of the Companies (and their directors, officers, employees and agents)
and
Indemnitee in connection with such event(s) and/or transaction(s).
9. Modification,
Waiver, Termination and Cancellation.
No
supplement, modification, termination, cancellation or amendment of this
agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this agreement shall be deemed
or
shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver.
10. Subrogation.
In the
event of payment under this agreement, the Companies shall be subrogated to
the
extent of such payment to all of the rights of recovery of Indemnitee, who
shall
execute all papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents necessary to
enable the Companies effectively to bring suit to enforce such rights.
11. Notice
by Indemnitee and Defense of Claim.
Indemnitee shall promptly notify the Companies in writing upon being served
with
any summons, citation, subpoena, complaint, indictment, information or other
document relating to any matter, whether civil, criminal, administrative or
investigative, but the omission so to notify the Companies will not relieve
it
from any liability that it may have to Indemnitee if such omission does not
prejudice the Companies’ rights. If such omission does prejudice the Companies’
rights, the Companies will be relieved from liability only to the extent of
such
prejudice; nor will such omission relieve the Companies from any liability
that
it may have to Indemnitee otherwise than under this agreement.
12. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered by hand
and
receipted for by the party to whom said notice or other communication shall
have
been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:
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000
Xxxxxxxxx Xxxxx
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Xxxxxxxxx,
Xxxxxxxxxxxx 00000
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Attention:
Xxxxxx X. Xxxxxxxx
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(b)
If to Velcera, to:
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Velcera
Pharmaceuticals, Inc.
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000
Xxxxxxxxx Xxxxx
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Xxxxxxxxx,
Xxxxxxxxxxxx 00000
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Attention:
Xxxxxx X. Xxxxxxxx
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(c)
If to Xx. Xxxxx, to:
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Xxxxxxx
X. Xxxxx
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000
Xxxxxxx Xxxxxx
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00xx
Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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or
to
such other address as may have been furnished to Indemnitee by the Companies
or
to the Companies by Indemnitee, as the case may be.
13. Nonexclusivity.
The
rights of Indemnitee hereunder shall not be deemed exclusive of any other rights
to which Indemnitee may be entitled under applicable law, Denali’s certificate
of incorporation or bylaws or otherwise.
14. Certain
Definitions.
(a) “Expenses”
shall
include all direct and indirect costs (including, without limitation, attorneys’
fees, retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, all other disbursements or out-of-pocket
expenses) actually and reasonably incurred in connection with either the
investigation, defense, settlement or appeal of a Proceeding or establishing
or
enforcing a right to indemnification under this agreement, applicable law or
otherwise; provided, however, that “Expenses” shall not include any Liabilities.
(b) “Independent
Legal Counsel”
shall
mean a law firm or a member of a firm selected by the Companies and approved
by
Indemnitee (which approval shall not be unreasonably withheld). Notwithstanding
the foregoing, the term “Independent Legal Counsel” shall not include any person
who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Companies or
Indemnitee in an action to determine Indemnitee’ right to indemnification under
this agreement.
(c) “Liabilities”
shall
mean liabilities of any type whatsoever including, but not limited to, any
judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid
in settlement (including all interest assessments and other charges paid or
payable in connection with or in respect of such judgments, fines, penalties
or
amounts paid in settlement) of any Proceeding.
(d) “Proceeding”
shall
mean any threatened, pending or completed action, claim, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing
or
any other proceeding whether civil, criminal, administrative or investigative,
that is associated with Indemnitee’ actions as officers and/or directors of
Denali relating to the approval of or consummation of the Merger, absent bad
faith, gross negligence, intentional misconduct, including any action brought
by
or in the right of Denali or Velcera.
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15. Binding
Effect; Duration and Scope of Agreement.
This
agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and 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 Companies), spouses,
heirs and personal and legal representatives. This agreement shall continue
in
effect for two (2) years subsequent to the closing of the Merger, regardless
of
whether Indemnitee continues to serve as director of Denali.
16. Severability.
If any
provision or provisions of this agreement (or any portion thereof) shall be
held
to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the
validity, legality and enforceability of the remaining provisions of this
agreement shall not in any way be affected or impaired thereby; and
(b) to
the
fullest extent legally possible, the provisions of this agreement shall be
construed so as to give effect to the intent of any provision held invalid,
illegal or unenforceable.
17. Governing
Law.
This
agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Delaware, as applied to contracts between Delaware
residents entered into and to be performed entirely within the State of
Delaware, without regard to conflict of laws rules.
18. Consent
to Jurisdiction.
The
Companies and Indemnitee each 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 brought only in the state courts
of the State of Delaware.
19. Entire
Agreement.
This
agreement represents the entire agreement between the parties hereto, and there
are no other agreements, contracts or understandings between the parties hereto
with respect to the subject matter of this agreement.
20. Counterparts.
This
agreement may be executed in one or more counterparts, each of which shall
for
all purposes be deemed to be an original but all of which together shall
constitute one and the same agreement.
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The
parties are signing this indemnity agreement as of the date first set forth
above.
| /s/ J. Xxx Xxxxxx | |||
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Name:
J. Xxx Xxxxxx
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| Title: President |
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VELCERA
PHARMACEUTICALS, INC.
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| /s/ Xxxxxx X. Xxxxxxxx | |||
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Name:
Xxxxxx X. Xxxxxxxx
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Title: President
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| /s/ Xxxxxxx X. Xxxxx | |||
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Xxxxxxx
X.
Xxxxx
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