<PAGE>
EXHIBIT 10.11
INDEMNIFICATION AGREEMENT dated __________ , between VANDA
PHARMACEUTICALS
INC., a Delaware corporation (the
"Company"), and _______ (the "Indemnitee").
WHEREAS, the Company has adopted
provisions in its Certificate of
Incorporation and Bylaws providing for
indemnification of its officers and
directors to the fullest extent permitted
by the DGCL, and the Company wishes to
clarify and enhance the rights and
obligations of the Company and the Indemnitee
with respect to indemnification;
NOW,
THEREFORE, in consideration of the Indemnitee's service or
continued
service as a director or officer of the
Company, the parties hereto agree as
follows:
1. Service
by Indemnitee. The Indemnitee agrees to serve or continue to
serve as a director or officer of the
Company so long as the Indemnitee is duly
elected and qualified or appointed and
until such time as the Indemnitee resigns
or fails to stand for reelection or is
removed from his position. The Indemnitee
may at any time and for any reason resign
or be removed from such position in
the sole discretion of the Company (subject
to any other contractual obligation
or any obligation or restriction imposed by
the Certificate of Incorporation or
Bylaws or otherwise by operation of law),
in which event the Company shall have
no obligation hereunder to continue the
Indemnitee in any such position.
2.
Indemnification. The Company shall indemnify the Indemnitee as
provided
in this Agreement and to the fullest extent
permitted by the DGCL in effect on
the date hereof and as amended from time to
time (but, in the case of any such
amendment, only to the extent that such
amendment permits the Company to provide
broader indemnification rights than such
law permitted the Company to provide
prior to such amendment). Without limiting
the scope of the indemnification
provided by this Section 2, the right to
indemnification of the Indemnitee
provided hereunder shall include, but shall
not be limited to, those rights
hereinafter set forth; provided, however,
that no indemnification shall be paid
to the Indemnitee:
(a)
to the extent
prohibited by the DGCL, the Certificate of
Incorporation or the Bylaws;
(b)
to the extent
payment with respect to any indemnifiable matter is
actually made to the Indemnitee under a valid and collectible
insurance policy or under a valid and enforceable indemnity
clause,
bylaw or other agreement of the Company or any other Person on
whose
board the Indemnitee serves at the request of the Company; or
(c)
in connection
with an action, suit or proceeding, or part thereof
(including claims and counterclaims) initiated by the
Indemnitee,
except a judicial proceeding or arbitration pursuant to Section
10
to enforce the rights under this Agreement, unless the action,
suit
or proceeding (or part thereof) was authorized by the Board.
3.
Indemnification in Proceedings other than Proceedings by or in
the
Right of the Company. Subject to Section 2,
the Indemnitee shall be entitled to
the indemnification rights provided in this
Section 3 if the Indemnitee was, is,
or is threatened to be made, a party to or
a
<PAGE>
participant in any Proceeding (other than a
Proceeding by or in the right of the
Company) by reason of the Indemnitee's
Corporate Status, or by reason of
anything done or not done by the Indemnitee
in any such capacity. Pursuant to
this Section 3, the Indemnitee shall be
indemnified against all costs,
judgments, penalties, fines, liabilities,
amounts paid in settlement by or on
behalf of the Indemnitee, and Expenses
(including all interest, assessments and
other charges paid or payable in connection
with or in respect of such Expenses)
actually and reasonably incurred by or on
behalf of the Indemnitee in connection
with such Proceeding or any claim, issue or
matter therein, if the Indemnitee
acted in good faith and in a manner the
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 the Indemnitee's conduct
was unlawful.
4.
Indemnification in Proceedings by or in the Right of the
Company.
Subject to Section 2, the Indemnitee shall
be entitled to the indemnification
rights provided in this Section 4 if the
Indemnitee was, is, or is threatened to
be made, a party to or participant in any
Proceeding brought by or in the right
of the Company to procure a judgment in its
favor by reason of the Indemnitee's
Corporate Status, or by reason of anything
done or not done by the Indemnitee in
any such capacity. Pursuant to this Section
4, the Indemnitee shall be
indemnified against all costs, judgments,
penalties, fines, liabilities, amounts
paid in settlement by or on behalf of the
Indemnitee, and Expenses (including
all interest, assessments and other charges
paid or payable in connection with
or in respect of such Expenses) actually
and reasonably incurred by or on behalf
of the Indemnitee in connection with such
Proceeding or any claim, issue or
matter therein, if the Indemnitee acted in
good faith and in a manner the
Indemnitee reasonably believed to be in or
not opposed to the best interests of
the Company; provided, however, that no
such indemnification shall be made in
respect of any claim, issue or matter as to
which applicable law expressly
prohibits such indemnification by reason of
any adjudication of liability of the
Indemnitee to the Company, unless and only
to the extent that the Court of
Chancery of the State of Delaware or the
court in which such action or suit was
brought shall determine upon application
that, despite the adjudication of
liability but in view of all the
circumstances of the case, the Indemnitee is
entitled to indemnification for such costs,
judgments, penalties, fines,
liabilities and Expenses as such court
shall deem proper.
5.
Indemnification for Costs, Charges and Expenses of Successful
Party.
Notwithstanding the limitations of Sections
3 and 4, to the extent that the
Indemnitee is successful, on the merits or
otherwise, in whole or in part, in
defense of any Proceeding or in defense of
any claim, issue or matter therein,
including, without limitation, the
dismissal of any action without prejudice, or
if it is ultimately determined that the
Indemnitee is otherwise entitled to be
indemnified against Expenses, the
Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred
by the Indemnitee in connection
therewith.
6. Partial
Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to
indemnification by the Company for some or a
portion of the costs, judgments, penalties,
fines, liabilities or Expenses
actually and reasonably incurred in
connection with any Proceeding, but not,
however, for the total amount thereof, the
Company shall nevertheless indemnify
the Indemnitee for the portion of such
costs, judgments, penalties, fines,
liabilities and Expenses actually and
reasonably incurred to which the
Indemnitee is entitled.
2
<PAGE>
7.
Indemnification for Expenses of a Witness and Additional
Expenses.
Notwithstanding any other provision of this
Agreement, to the maximum extent
permitted by applicable law, the Indemnitee
shall be entitled to indemnification
against all Expenses actually and
reasonably incurred or suffered by the
Indemnitee or on the Indemnitee's behalf if
the Indemnitee appears as a witness
or otherwise incurs legal expenses as a
result of or related to the Indemnitee's
service as a director or officer of the
Company, in any threatened, pending or
completed legal, administrative,
investigative or other proceeding or matter to
which the Indemnitee neither is, nor is
threatened to be made, a party.
8.
Determination of Entitlement to Indemnification. Upon written
request
by the Indemnitee for indemnification
pursuant to Sections 3, 4, 5, 6 or 7, the
entitlement of the Indemnitee to
indemnification, to the extent not expressly
provided for pursuant to the terms of this
Agreement, shall be determined by the
following person or persons, who shall be
empowered to make such determination:
(a) if a Change of Control shall have
occurred, by Independent Counsel in a
written opinion to the Board, a copy of
which shall be delivered to the
Indemnitee; and (b) if a Change of Control
shall not have occurred, (i) by the
Board by a majority vote of Disinterested
Directors, whether or not such
majority constitutes a quorum; (ii) by a
committee of Disinterested Directors
designated by a majority vote of such
directors, whether or not such majority
constitutes a quorum; (iii) if there are no
Disinterested Directors, or if the
Disinterested Directors so direct, by
Independent Counsel in a written opinion
to the Board, a copy of which shall be
delivered to the Indemnitee; or (iv) the
stockholders of the Company. Such
Independent Counsel shall be selected by the
Board and approved by the Indemnitee. Upon
any failure of the Board so to select
such Independent Counsel or upon the
failure of the Indemnitee so to approve,
such Independent Counsel shall be selected
upon application to a court of
competent jurisdiction. Such determination
of entitlement to indemnification
shall be made not later than 30 days after
receipt by the Company of a written
request for indemnification. Such request
shall include documentation or
information that is necessary for such
determination and which is reasonably
available to the Indemnitee. Any Expenses
incurred by the Indemnitee in
connection with a request for
indemnification or payment of Expenses hereunder,
under any other agreement, any provision of
the Certificate of Incorporation,
Bylaws or any directors' and officers'
liability insurance of the Company, shall
be borne by the Company. The Company shall
indemnify the Indemnitee for any such
Expense and agrees to hold the Indemnitee
harmless therefrom irrespective of the
outcome of the determination of the
Indemnitee's entitlement to indemnification.
If the person or persons making such
determination shall determine that the
Indemnitee is entitled to indemnification
as to part (but not all) of the
application for indemnification, such
person or persons shall reasonably prorate
such partial indemnification among the
claims, issues or matters at issue at the
time of the determination. If it is
determined that the Indemnitee is entitled
to indemnification, payment to the
Indemnitee shall be made within seven days
after such determination.
9.
Presumptions and Effect of Certain Proceedings. The Secretary of
the
Company shall, promptly upon receipt of the
Indemnitee's request for
indemnification, advise in writing the
Board or such other person or persons
empowered to make the determination as
provided in Section 8 that the Indemnitee
has made such request for indemnification.
Upon making such request for
indemnification, the Indemnitee shall be
presumed to be entitled to
indemnification hereunder and the Company
shall have the burden of proof in
making any determination contrary
3
<PAGE>
to such presumption. If the person or
persons so empowered to make such
determination shall have failed to make the
requested determination with respect
to indemnification within 30 days after
receipt by the Company of such request,
a requisite determination of entitlement to
indemnification shall be deemed to
have been made and the Indemnitee shall be
absolutely entitled to such
indemnification, absent actual and material
fraud in the request for
indemnification. The termination of any
Proceeding described in Sections 3 or 4
by judgment, order, settlement or
conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself,
(a) create a presumption that the
Indemnitee did not act in good faith and in
a manner that the Indemnitee
reasonably believed to be in or not opposed
to the best interests of the
Company, or, with respect to any criminal
Proceeding, that the Indemnitee had
reasonable cause to believe that the
Indemnitee's conduct was unlawful; or (b)
otherwise adversely affect the rights of
the Indemnitee to indemnification
except as may be provided herein.
10.
Remedies of the Indemnitee in Cases of Determination not to
Indemnify
or to pay Expenses. In the event that a
determination is made that the
Indemnitee is not entitled to
indemnification hereunder or if payment has not
been timely made following a determination
of entitlement to indemnification
pursuant to Sections 8 and 9, or if
Expenses are not paid pursuant to Section
15, the Indemnitee shall be entit
