INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "AGREEMENT") is made and entered
into this ___ day of _________, ____, between DrugAbuse Sciences, a
California corporation (the "COMPANY"), and _______________ ("INDEMNITEE").
A. Indemnitee, as a member of the Company's Board of Directors
and/or an officer of the Company, performs valuable services for the Company;
B. The Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for corporate directors, officers,
employees, controlling persons, agents and fiduciaries, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance.
C. The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, controlling persons, agents and fiduciaries to expensive
litigation risks at the same time as the availability and coverage of
liability insurance has been severely limited.
D. The shareholders of the Company have adopted Bylaws (the
"BYLAWS") providing for the indemnification of the officers, directors,
agents and employees of the Company to the maximum extent authorized by the
California Corporations Code, as amended ("CODE").
E. Indemnitee does not regard the current protection available for
the Company's directors, officers, employees, controlling persons, agents and
fiduciaries as adequate under the present circumstances, and Indemnitee and
other directors, officers, employees, controlling persons, agents and
fiduciaries of the Company may not be willing to serve or continue to serve
in such capacities without additional protection.
F. The Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Company and its directors, officers, employees,
controlling persons, agents and fiduciaries with respect to indemnification
of such directors.
G. The Company (i) desires to attract and retain the involvement
of highly qualified individuals, such as Indemnitee, to serve the Company
and, in part, in order to induce Indemnitee to be involved with the Company,
and (ii) wishes to provide for the indemnification and advancing of expenses
to Indemnitee to the maximum extent permitted by law.
H. In view of the considerations set forth above, the Company
desires that Indemnitee be indemnified by the Company as set forth herein.
NOW, THEREFORE, in consideration of Indemnitee's service to the
Company, the parties hereto agree as follows:
1. INDEMNITY OF INDEMNITEE. The Company hereby agrees to
indemnify Indemnitee to the fullest extent permitted by law, even if such
indemnification is not specifically authorized by the other provisions of
this Agreement, the Company's Articles of Incorporation, the Company's Bylaws
or by statute. 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 California
corporation to indemnify a member of its Board of Directors or an officer,
employee, controlling person, 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 California
corporation to indemnify a member of its Board of Directors or an officer,
employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 3 hereof.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, the Company hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) against any and all expenses (including attorneys'
fees), witness fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee in connection with any threatened,
pending or completed action, claim, suit, arbitration, alternative dispute
resolution mechanism, investigation, or any other proceeding, whether civil,
criminal, administrative or investigative (including any appeal therefrom and
including an action by or in the right of the Company) to which Indemnitee
is, was, or at any time becomes a party, or is threatened to be made a party,
by reason of the fact that Indemnitee is, was, or at any time becomes a
director, officer, employee or agent of the Company, or is or was serving or
at any time serves at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (collectively, a "PROCEEDING"); and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Company under the Articles of Incorporation of the Company
and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid
by the Company for any of the following:
(i) except to the extent the aggregate of losses to
be indemnified thereunder exceeds the sum of such losses for which the
Indemnitee is indemnified pursuant to Section 1 hereof or pursuant to any
Directors' and Officers' Insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Indemnitee if
it shall be determined by a final judgment or other final adjudication that
such remuneration was in violation of law;
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(iii) on account of any Proceeding in which judgment is
rendered against Indemnitee for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law;
(iv) on account of any Proceeding to the extent that
Indemnitee is a plaintiff, a counter-complainant or a cross-complainant
therein (other than a Proceeding referred to in Section 8 hereof) unless such
Proceeding was authorized in the specific case by action of the Board of
Directors;
(v) on account of Indemnitee's conduct which is the
subject of any Proceeding described in Section 7(c)(ii) hereof; or
(vi) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is not
lawful (and, in this respect, both the Company and Indemnitee have been
advised that the Securities and Exchange Commission believes that
indemnification for liabilities arising under the federal securities laws is
against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication).
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in
an action by or in the right of the Company shall be paid by the Company for
any of the following:
(i) in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company in the
performance of Indemnitee's duty to the Company and its shareholders, unless
and only to the extent that the court in which such Proceeding is or was
pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for expenses and then only to the extent that the court shall
determine;
(ii) of amounts paid in settling or otherwise
disposing of a pending action without Court approval; or
(iii) of expenses incurred in defending a pending
action which is settled or otherwise disposed of without court approval.
(iv) on account of Indemnitee's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law;
(v) on account of acts or omissions that Indemnitee
believes to be contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the part of
Indemnitee;
(vi) with respect to any transaction from which
Indemnitee derived an improper personal benefit;
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(vii) on account of acts or omissions that show a
reckless disregard for Indemnitee's duty to the Company or its shareholders
in circumstances in which Indemnitee was aware, or should have been aware, in
the ordinary course of performing such Indemnitee's duties, of a risk of
serious injury to the Company or its shareholders;
(viii) on account of acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of
Indemnitee's duty to the Company or its shareholders;
(ix) to the extent prohibited by Section 310 of the
California Corporations Code, "Contracts In Which Director Has Material
Financial Interest; Validity," or;
(x) to the extent prohibited by Section 316 of the
California Corporations Code, "Corporate Actions Subjecting Directors To
Joint And Several Liability; Actions; Damages."
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 hereof is unavailable by reason of a Court decision described in
Section 3(a)(vi) hereof based on grounds other than any of those set forth in
Sections 3(a)(ii) through (v) hereof or in Sections 3(b)(i) through (x)
hereof, then in respect of any threatened, pending or completed action, suit
or proceeding in which the Company is jointly liable with Indemnitee (or
would be if joined in such action, suit or proceeding), the Company shall
contribute to the amount of expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred and
paid or payable by Indemnitee in such proportion as is 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 such action,
suit or 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, judgments, fines or settlement amounts, 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, judgments, fines or settlement amounts. The
Company agrees that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation or any
other method of allocation which does not take account of the foregoing
equitable considerations.
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
the Company contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of the Company (or is or was serving at
the request of the Company as a director, officer employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise) and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal or investigative, by
reason of the fact that Indemnitee was an officer or director of the Company
or serving in any other capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than 30 days
after receipt by Indemnitee of notice of the commencement of any action, suit
or proceeding, Indemnitee will, if
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a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; but the omission
so to notify the Company will not relieve it from any liability which it may
have to Indemnitee otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Indemnitee notifies the Company
of the commencement thereof:
(a) the Company will be entitled to participate therein at
its own expense;
(b) except as otherwise provided below, to the extent that
it may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will
not be liable to Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. Indemnitee shall have the right to employ its counsel in such action,
suit or proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of the defense of such action or (iii) the Company
shall not in fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of Indemnitee's separate counsel
shall be at the expense of the Company. The Company shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on behalf
of the Company or as to which Indemnitee shall have made the conclusion
provided for in (ii) above; and
(c) the Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action or
claim effected without its written consent. The Company shall be permitted
to settle any action except that it shall not settle any action or claim in
any manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Neither the Company nor Indemnitee will
unreasonably withhold its consent to any proposed settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Indemnitee employs his own counsel
pursuant to Section 6(b)(i) through (iii) above, the Company shall advance to
Indemnitee, prior to any final disposition of any threatened or pending
action, suit or proceeding, whether civil, criminal, administrative or
investigative, any and all reasonable expenses (including legal fees and
expenses) incurred in investigating or defending any such action, suit or
proceeding within ten business days after receiving copies of invoices
presented to Indemnitee for such expenses; and
(b) Indemnitee agrees that Indemnitee will reimburse the
Company for all reasonable expenses paid by the Company in defending any
Proceeding in the event and only to the extent it shall be ultimately
determined by a final judicial decision (from which there is no right of
appeal) that Indemnitee is not entitled, under applicable law, the Company's
Bylaws, this Agreement or otherwise, to be indemnified by the Company for
such expenses.
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(c) Notwithstanding the foregoing, the Company shall not be
required to advance such expenses to Indemnitee if Indemnitee (i) commences
or is a party to any action, suit or proceeding as a plaintiff unless such
advance is specifically approved by a majority of the Board of Directors, or
(ii) is a party to an action, suit or proceeding brought by the Company and
approved by a majority of the Board of Directors which alleges willful
misappropriation of corporate assets by Indemnitee, disclosure of
confidential information in violation of Indemnitee's fiduciary or
contractual obligations to the Company, or any other willful and deliberate
breach in bad faith of Indemnitee's duty to the Company or its shareholders.
8. ENFORCEMENT. In the event Indemnitee brings any action to
enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in bringing and pursuing such
action.
9. 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.
10. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Indemnitee
by this Agreement shall not be exclusive of any other right which Indemnitee
may have or hereafter acquire under any statute, provision of the Company's
Articles of Incorporation or Bylaws, agreement, vote of shareholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office.
11. SURVIVAL OF RIGHTS. The rights conferred on Indemnitee by this
Agreement shall continue after Indemnitee has ceased to be a director,
officer, employee or other agent of the Company and shall inure to the
benefit of Indemnitee's heirs, executors and administrators.
12. NOTICE. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given (a) five calendar days after deposit
with the U.S. Postal Service or other applicable postal service, if delivered
by first class mail, postage prepaid, (b) upon delivery, if delivered by
hand, (c) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid, or (d) one day after
the business day of delivery by facsimile transmission, if deliverable by
facsimile transmission, with copy by first class mail, postage prepaid, and
shall be addressed if to Indemnitee, at Indemnitee's address as set forth
beneath Indemnitee's signature to this Agreement and if to the Company at the
address of its principal corporate offices (attention: Chief Executive
Officer) or at such other address as such party may designate by ten calendar
days' advance written notice to the other party hereto.
13. 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 limitations, each portion of this
Agreement containing any provision held to
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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.
14. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
15. BINDING EFFECT. This Agreement shall be binding upon
Indemnitee and upon the Company, its successors and assigns, and shall inure
to the benefit of Indemnitee, his heirs, personal representatives and assigns
and to the benefit of the Company, its successors and assigns.
16. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is
in writing signed by all 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.
17. 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.
18. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in
this Agreement shall be construed as giving the Indemnitee any right to be
retained in the employ of the Company or any of its subsidiaries.
19. CORPORATE AUTHORITY. The Board of Directors and shareholders
of the Company have approved the terms of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
COMPANY:
DrugAbuse Sciences
By _____________________________
Philippe Pouletty,
President
Address:____________________________
_____________________________
INDEMNITEE
____________________________________
XXXXXX
Address:____________________________
_____________________________
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