Exhibit 10.6
FORM OF INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (the “ Agreement ”) is
entered into as of
this
day
of ,
200 , by and between Depomed, Inc., a California
corporation (the “ Company ”),
and ,
an individual (“ Indemnitee ”).
BACKGROUND
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 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.
2.
Agreement to Indemnify . Subject to the terms and
conditions of, and in 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 .
(a)
Initial Request . Whenever Indemnitee believes that,
in a specific case,
2
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 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 person or persons making
the determination shall have reasonably determined, after
consultation with counsel, 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.
(c)
Advancement of Expenses . If so requested in a writing
by 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
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