EXHIBIT 10.10
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into as of this
______ day of ____________, 1997, by and between DepoMed, Inc., a California
corporation (the "Company"), and ___________________, an individual
("Indemnitee").
B A C K G R O U N D
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A. Indemnitee is a member of the Board of Directors or an officer of the
Company and, in that capacity, performs a valuable service for the Company. For
a variety of reasons, including the frequency, magnitude and often baseless
nature of claims and actions brought against corporate directors and officers
generally, it is difficult for corporations to attract and retain highly
competent persons as directors and officers. In addition, there exists
uncertainty, both as to matters of "substance" and "procedure," about the
protection against such claims provided by statutory, charter and bylaw
provisions and through "director and officer" insurance.
B. The Company's Bylaws also provide for indemnification of, and
advancement of expenses to, the directors and officers of the Company to the
fullest extent permissible under California law, and permit, by their
nonexclusive nature, the establishment of indemnification agreements between the
Company and its directors and officers.
C. In order to induce Indemnitee to continue to serve as a member of the
Board of Directors or as an officer of the Company and to clarify the specific
procedure for addressing indemnification matters if and as they arise, the
Company and the Indemnitee hereby agree to contractual indemnification
arrangements on the terms set forth in this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Definitions. For purposes of this Agreement, the following terms have
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the following meanings:
(a) "Disinterested Director" means a director of the Company who
neither is nor was a party to the Proceeding in respect of which indemnification
is sought under this Agreement or otherwise.
(b) "Expenses" includes any and all direct and indirect costs
(including, without limitation, attorneys' fees and disbursements, court costs,
fees and expenses of witnesses, experts, professional advisers and private
investigators, arbitration expenses, costs of attachment, appeal or similar
bonds, travel expenses, duplicating, printing and binding costs, telephone
charges, postage, delivery service fees, and any and all other disbursements or
out-of-pocket expenses) actually and reasonably incurred by or on behalf of
Indemnitee in connection with either (i) the investigation, defense, settlement
or appeal of, or being a witness or participant in, a Proceeding (including
preparing for any of the foregoing) or (ii) the establishment or enforcement of
any right to indemnification under this Agreement or otherwise or any right to
recovery under any liability insurance policy maintained by the Company;
provided, however, that "Expenses" shall not include any judgments, fines or
amounts paid in settlement.
(c) "Independent Counsel" means a law firm or attorney that neither is
presently nor in the past two years has been retained to represent: (i) the
Company or Indemnitee in any matter material to the Company or Indemnitee, or
(ii) any other party to the Proceeding in respect of which indemnification is
sought under this Agreement or otherwise. In addition, the term "Independent
Counsel" does not include any law firm or attorney who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee's right to indemnification under this Agreement or
otherwise.
(d) "Liabilities" means liabilities and losses of any type whatsoever,
including, without limitation, judgments, fines, excise taxes and penalties
(including ERISA excise taxes and penalties) and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such liabilities and losses), actually incurred
by Indemnitee in connection with or as a result of a Proceeding.
(e) "Proceeding" means any threatened, pending or completed action,
suit or proceeding (including any inquiry, hearing, arbitration proceeding or
alternative dispute resolution mechanism), whether civil, criminal,
administrative or investigative (including any action by or in the right of the
Company), to which Indemnitee is or was a party, witness or other participant,
or is threatened to be made a party, witness or other participant, by reason of
the fact that Indemnitee is or was a director or officer of the Company, or by
reason of anything done or not done by Indemnitee in that capacity or in any
other capacity while serving as a director or officer of the Company, whether
before or after the date of this Agreement. "Proceeding" shall not include any
Proceeding initiated by Indemnitee (other than as contemplated by Sections 3(d)
or 6 of this Agreement) unless such Proceeding was authorized or consented to by
the Board of
Directors of the Company.
Agreement to Indemnify. Subject to the terms and conditions of, and in
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accordance with the procedures set forth in, this Agreement, the Company shall
hold Indemnitee harmless and indemnify Indemnitee (and Indemnitee's spouse as
provided below), to the fullest extent permitted by the provisions of California
law and other applicable law, from and against all Expenses and Liabilities,
including, without limitation, Expenses and Liabilities arising from any
Proceeding brought by or in the right of the Company or its shareholders. The
Company and Indemnitee intend that this Agreement shall provide for
indemnification in excess of that expressly granted by statute or provided by
the Company's Articles of Incorporation, Bylaws or by vote of its shareholders.
If, after the date hereof, California law or any other applicable law is amended
to permit or authorize indemnification of, or advancement of defense expenses
to, Indemnitee to a greater extent than is permitted on the date hereof,
references in this Agreement to California law or any other applicable law shall
be deemed to refer to California law or such applicable law as so amended.
3. Procedural Matters.
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(a) Initial Request. Whenever Indemnitee believes that, in a specific
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case, Indemnitee is then entitled to indemnification under this Agreement or
under the Company's Articles of Incorporation or Bylaws, California law or
otherwise, Indemnitee shall submit a written notice to the Company requesting an
authorization and determination by the Company to that effect. The notice shall
describe the matter giving rise to the request and be accompanied by all
appropriate supporting documentation reasonably available to Indemnitee.
(b) Determination and Payment. The Company shall make a determination
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about Indemnitee's entitlement to indemnification in the specific case no later
than 90 days after receipt of Indemnitee's request. In making that
determination, the person or persons making the determination shall presume that
Indemnitee met any applicable standard of conduct required for indemnification,
unless the Company shall have affirmatively shown by clear and convincing
evidence that Indemnitee did not meet that standard. The determination shall be
made by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors. If such a quorum is not obtainable, or, even if
obtainable, a quorum of Disinterested Directors so directs, the determination
shall be made by Independent Counsel in a written opinion obtained at the
Company's expense. If the person or persons empowered to make the determination
either: (i) affirmatively makes a determination of Indemnitee's entitlement to
indemnification or (ii) fails to make any determination at all within the 90-day
period,
indemnification shall be considered as authorized and proper in the
circumstances, and Indemnitee shall be absolutely entitled to such
indemnification, and shall receive payment as promptly as practicable, in the
absence of any misrepresentation of a material fact by Indemnitee in the request
for indemnification, or a specific determination by a court of competent
jurisdiction that all or any part of such indemnification is prohibited by
applicable law. If the person or persons empowered to make the determination
find that the Indemnitee is not entitled to indemnification, the Indemnitee
shall have the right to apply to a court of competent jurisdiction for the
purpose of enforcing Indemnitee's right to indemnification pursuant to this
Agreement. The termination of any Proceeding by judgment, order, settlement,
arbitration award, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in the best
interests of the Company, or that, with respect to any criminal Proceeding,
Indemnitee had reasonable cause to believe his conduct was unlawful, reckless or
otherwise not in the best interests of the Company.
(c) Advancement of Expenses. If so requested in a writing by
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Indemnitee accompanied by appropriate supporting documentation, the Company
shall, within ten days after receipt of the request, advance funds for the
payment of Expenses, whether that request is made before or after the final
disposition of a Proceeding (including, without limitation, any criminal
Proceeding or any Proceeding brought by or in the right of the Company or its
shareholders), unless there has been a final determination that Indemnitee is
not entitled to indemnification for those Expenses. If required by law at the
time of the advance, the payment of the advance shall be conditioned upon the
receipt from Indemnitee of an undertaking (which need not be secured) to repay
the advance to the extent that it is ultimately determined that Indemnitee is
not entitled to such indemnification by the Company. Any dispute concerning the
advancement of Expenses may, at the election of the Indemnitee, be resolved by
arbitration before an arbitrator selected by Indemnitee and approved by the
Company. If the parties cannot agree on a single arbitrator, then the claim
shall be heard by a panel of three arbitrators, with one selected by Indemnitee,
one selected by the Company and one selected jointly by the foregoing two
arbitrators. Each of the arbitrators shall be a litigation or corporate
attorney with experience in the field of officer and director indemnification.
The arbitrators shall be selected within fifteen (15) days after demand for
arbitration and shall render a decision within forty-five (45) days after
selection, unless good cause is shown for requiring a longer decision period.
The Company shall act in utmost good faith to provide timely information to the
arbitrators and to insure Indemnitee a full opportunity to defend against the
Company's claim that Indemnitee is not entitled to an advance of Expenses. The
Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee
under the dispute resolutions proceedings set forth in this Subsection 3(c),
unless a court of competent jurisdiction finds that each of the
claims and/or defenses by Indemnitee in the action or proceeding for which an
advance is sought was frivolous or made in bad faith.
(c) Enforcement. If Indemnitee has not received a determination of
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entitlement to indemnification or an advance, as the case may be, within the
applicable time periods for such actions specified in this Agreement, or if it
has been determined that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall be
entitled to commence an action in any court of competent jurisdiction (including
the court in which the Proceeding (as to which Indemnitee seeks indemnification)
is or was pending) (i) in the former case, seeking enforcement of Indemnitee's
rights under this Agreement or otherwise, or seeking an initial determination by
the court, or (ii) in the latter case, challenging any such determination or any
aspect thereof, including the legal or factual bases therefor. The Company
hereby consents to service of process and to appear generally in any such
proceeding. It shall be a defense to any such action that applicable law does
not permit the Company to indemnify Indemnitee for the amount claimed. In any
such action, the Company shall have the burden of proving that indemnification
or advances are not proper in the circumstances of the specific case. Neither
the failure of the Company to have made a determination prior to the
commencement of such action that indemnification is proper under the
circumstances because Indemnitee has met the standard of conduct under
applicable law, nor an actual determination by the Company that Indemnitee has
not met such standard of conduct, shall be a defense to the action or create a
presumption that Indemnitee has not met that standard of conduct. The Company
shall indemnify Indemnitee for Expenses incurred by Indemnitee in connection
with the successful establishment or enforcement, in whole or in part, by
Indemnitee of his right to indemnification or advances.
(e) Notice by Indemnitee and Defense of Proceedings. Indemnitee shall
promptly notify the Company in writing upon being served with any summons,
citation, subpoena, complaint, indictment, information or other document
relating to any matter which may give rise to a claim for indemnification under
this Agreement or otherwise; provided, however, that a failure of Indemnitee to
provide that notice shall relieve the Company from liability only if and to the
extent that the failure materially prejudices the Company's ability to
adequately defend Indemnitee in the Proceeding. With respect to any Proceeding
as to which Indemnitee so notifies the Company:
(i) The Company shall be entitled to participate at its own
expense.
(ii) Except as otherwise provided below, the Company, jointly
with any other indemnifying party similarly notified, shall be entitled to
assume the defense of such Proceeding, with counsel reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of the Company's
election to assume the defense, the Company shall not be liable to Indemnitee
under this Agreement for any Expenses subsequently incurred by Indemnitee, other
than as provided below. Indemnitee shall have the right to employ his own
counsel in that Proceeding, but the fees and expenses of such counsel incurred
after notice from the Company of its election so to assume the defense shall be
borne by Indemnitee, except to the extent that (x) the employment of counsel by
Indemnitee has been authorized by the Company, (y) Indemnitee has reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of the defense of such Proceeding or that counsel
selected by the Company may not be adequately representing Indemnitee, or (z)
the Company has not in fact employed counsel to assume the defense of such
Proceeding. In those cases, the fees and expenses of Indemnitee's own counsel
shall be paid by the Company.
(iii) Neither the Company nor Indemnitee shall unreasonably
withhold its or his consent to any proposed settlement. The Company has no
obligation to indemnify and hold Indemnitee harmless under this Agreement for
any amounts paid in settlement of any Proceeding effected without its written
consent. The Company shall not settle any Proceeding in any manner which would
impose any penalty or limitation on Indemnitee without Indemnitee's written
consent.
4. Nonexclusivity. The indemnification provided by this Agreement is not
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exclusive of or inconsistent with any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation or Bylaws, any other agreement,
any vote of shareholders or directors, California law, or otherwise, both as to
action in Indemnitee's official capacity and otherwise. If and to the extent
that a change in the California Corporations Code (whether by statute or
judicial decision) permits greater indemnification by agreement than would be
afforded currently under the Company's Bylaws or under this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change.
5. Partial Indemnification. If Indemnitee is entitled to indemnification
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by the Company for some or a portion of Expenses or Liabilities but not for the
total amount, the Company shall nevertheless indemnify Indemnitee for the
portion of such Expenses and Liabilities to which Indemnitee is entitled to be
indemnified.
6. Liability Insurance. To the extent the Company maintains an insurance
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policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the
maximum extent of the coverage available for any Company director or officer, as
the case may be. If Indemnitee serves as a fiduciary of any employee benefit
plan of the Company or any of its subsidiary or affiliated corporations, then to
the extent that the Company maintains an insurance policy or policies providing
fiduciaries' liability insurance, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage available for any fiduciary. Upon notice to the Company, either from
Indemnitee or from any other source, of the commencement or threat of
commencement of any Proceeding or matter which may give rise to a claim for
indemnification of Indemnitee and which may be covered by any insurance policy
maintained by the Company, the Company shall promptly give notice to the insurer
in accordance with the procedures prescribed by such policy and shall thereafter
take all necessary or appropriate action to cause such insurer to pay, to or on
behalf of Indemnitee all Liabilities and Expenses payable under such policy with
respect to such Proceeding or matter. The Company shall indemnify Indemnitee for
Expenses incurred by Indemnitee in connection with any successful action brought
by Indemnitee for recovery under any insurance policy referred to in this
Section 6 and shall advance to Indemnitee the Expenses of such action in the
manner provided in Section 3(c) above.
7. Other Sources. Indemnitee shall not be required to exercise any
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rights Indemnitee may have against any other parties (for example, under an
insurance policy purchased by Indemnitee, the Company or any other person or
entity) before Indemnitee exercises or enforces Indemnitee's rights under this
Agreement. However, to the extent the Company actually indemnifies Indemnitee
or advances Indemnitee funds in respect of Expenses, the Company shall be
entitled to enforce any such rights which Indemnitee may have against third
parties. Indemnitee shall assist the Company in enforcing those rights if it
pays Indemnitee's costs and expenses of doing so. If Indemnitee is actually
indemnified or advanced Expenses by any such third party, then, for so long as
Indemnitee is not required to disgorge the amounts so received, to that extent
the Company shall be relieved of its obligation to indemnify Indemnitee or to
advance Expenses.
8. Certain Relationships. The obligations and rights created under this
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Agreement shall not be affected by any amendment to the Company's Articles of
Incorporation or Bylaws or any other agreement or instrument to which Indemnitee
is not a party, and shall not diminish any other rights which Indemnitee now or
in the future has against the Company or any other person or entity.
9. Severability. If any provision of this Agreement is determined to be
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unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the Company and Indemnitee. In any
event, the remaining provisions of this Agreement shall remain enforceable to
the maximum extent possible.
10. Contribution. If the indemnification provided in Section 2 of this
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Agreement is unavailable, then, in respect of any Proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in the
Proceeding), the Company shall contribute to the amount of Expenses and
Liabilities as appropriate to reflect: (i) the relative benefits received by the
Company, on the one hand, and Indemnitee, on the other hand, from the
transaction from which the Proceeding arose, and (ii) the relative fault of the
Company, on the one hand, and of Indemnitee, on the other, in connection with
the events which resulted in such Expenses and Liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of Indemnitee, on the other, shall be determined by reference to,
among other things, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent the circumstances resulting in
such Expenses and Liabilities. The Company agrees that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation or any other method of allocation which does not take account of
the equitable considerations described in this Section 10.
11. Governing Law. This Agreement shall be governed by and its provisions
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construed in accordance with the laws of the State of California as applied to
contracts between California residents entered into and to be performed entirely
within California.
12. Notices. All notices and other communications under this Agreement
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shall be in writing and shall be given by personal or courier delivery,
confirmed facsimile or telex transmission or first class mail, and shall be
deemed to have been duly given upon receipt if personally delivered or delivered
by courier, on the date of transmission if transmitted by facsimile or telex, or
three days after mailing if mailed, to the addresses set forth below:
If to Indemnitee:
__________________________________
__________________________________
__________________________________
Attn: _____________________________
If to the Company:
DepoMed, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
or to such other address as either party may designate by notice to the other
from time to time.
13. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall constitute an original.
14. Successors and Assigns. This Agreement shall be binding upon the
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Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's spouse, estate, heirs, executors, administrators,
personal or legal representatives and assigns. The Company shall require any
successor corporation (whether by merger, consolidation, or otherwise) 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.
15. Amendment and Waiver. This Agreement may not be amended except by a
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writing executed by both the Company and Indemnitee. No waiver of any provision
of this Agreement shall be effective unless in writing and signed by the party
to be charged therewith. A waiver of, or a failure to insist on, complete
compliance with any provision of this Agreement shall not be construed as a
waiver of a subsequent or different non-compliance, breach or default of that or
any other provision of this Agreement.
16. Acknowledgment. The Company expressly acknowledges that it has
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entered into this Agreement and assumed the obligations imposed on the Company
under this Agreement in order to induce Indemnitee to serve or to continue to
serve as a director or officer and acknowledges that Indemnitee is relying on
this Agreement in serving or continuing to serve in such capacity. The Company
further agrees to stipulate in any court proceeding that the Company is bound by
all of the provisions of this Agreement.
17. Period of Limitations. No legal action shall be brought and no cause
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of action shall be asserted by or in the right of the Company against
Indemnitee, estate, heirs, executors, administrators 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.
18. Duration of Agreement. This Agreement shall continue in effect for so
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long as Indemnitee is subject to any possible Proceeding, regardless of whether
Indemnitee
continues to serve as a director or officer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in its first paragraph.
DEPOMED, INC.
By:
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Title:
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Indemnitee
