Exhibit 10.1
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
(this “ Agreement ”) dated as of
October 18, 2007 by and between Sucampo
Pharmaceuticals, Inc. (the “ Company ”), a
Delaware corporation, and Anthony C. Celeste (“
Indemnitee ”):
WHEREAS , competent persons
are reluctant to serve a corporation as a director or in another
capacity unless they are provided with adequate protection through
insurance or adequate indemnification against inordinate risks of
claims and actions against them arising out of their service to and
activities on behalf of corporations;
WHEREAS , the Board of
Directors of the Company has determined that the ability to attract
and retain such persons is in the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such
protection in the future; and
WHEREAS , it is reasonable,
prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so
indemnified; and
WHEREAS , Indemnitee is
willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that
Indemnitee be so indemnified;
NOW, THEREFORE , in
consideration of the premises, the mutual agreements herein set
forth below and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. Definitions . For
purposes of this Agreement the following terms shall have the
meanings set forth below:
(a) “ Board ”
shall mean the Board of Directors of the Company.
(b) “ Change of Control
” shall mean any of the following events:
(i) Unless approved by the
affirmative vote of at least two-thirds of those members of the
Board who are in office immediately prior to the event(s) and who
are not employees of the Company:
(A) the merger or consolidation of
the Company with, or the sale of all or substantially all of the
assets of the Company to, any person or entity or group of
associated persons or entities; or
(B) the acquisition of direct or
indirect beneficial ownership in the aggregate of securities of the
Company representing twenty percent (20%) or more of the total
combined voting power of the Company’s then
issued and
outstanding securities by any person or entity, or group of
associated persons or entities acting in concert, not affiliated
(within the meaning of the Securities Act of 1933) with the Company
as of the date of this Agreement; or
(C) approval by the stockholders of
the Company of any plan or proposal for the liquidation or
dissolution of the Company; or
(ii) A change in the composition of
the Board at any time during any consecutive 24-month period such
that the “Continuing Directors” cease for any reason to
constitute at least a seventy percent (70%) majority of the Board.
For purposes of this clause (ii), “Continuing
Directors” means those members of the Board who either:
(A) were members of the Board at the
beginning of such consecutive 24-month period; or
(B) were elected by, or on the
nomination or recommendation of, at least a two-thirds majority
(consisting of at least five directors) of the then-existing
Board.
(c) “ Corporate Status
” describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was
serving at the express written request of the Company.
(d) “ Disinterested
Director ” means a director of the Company who is not and
was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(e) “ Enterprise ”
shall mean the Company and any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the express written request
of the Company as a director, officer, employee, agent or
fiduciary.
(f) “ Expenses ”
shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in a
Proceeding.
(g) “ Good Faith ”
shall mean Indemnitee having acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal
Proceeding, having had no reasonable cause to believe
Indemnitee’s conduct was unlawful.
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(h) “ Independent
Counsel ” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter
material to either such party or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “ Independent
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 Company or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
(i) “ Proceeding ”
includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any
other actual, threatened or completed proceeding whether civil,
criminal, administrative or investigative, other than one initiated
by Indemnitee. For purposes of the foregoing sentence, a “
Proceeding ” shall not be deemed to have been
initiated by Indemnitee where Indemnitee seeks pursuant to
Section 9 of this Agreement to enforce Indemnitee’s
rights under this Agreement.
2. Term of Agreement .
This Agreement shall continue until and terminate upon the later
of: (a) 10 years after the date that Indemnitee has
ceased to serve as a director, officer, employee, agent or
fiduciary of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
which Indemnitee served at the express written request of the
Company or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of expenses hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 9 of
this Agreement relating thereto. In addition, no legal action shall
be brought and no cause of action shall be asserted by or in the
right of the Company against Indemnitee, Indemnitee’s estate,
spouse, heirs, executors or personal or legal representatives after
the expiration of five (5) 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 five
(5) 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.
3. Services by Indemnitee,
Notice of Proceedings .
(a) Services . Indemnitee
agrees to serve as a director of the Company. Indemnitee may at any
time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation
of law).
(b) Notice of Proceeding .
Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any
Proceeding or matter that may be subject to indemnification or
advancement of Expenses covered hereunder.
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4. Indemnification
.
(a) In General . In connection
with any Proceeding, the Company shall indemnify and advance
Expenses to Indemnitee as provided in this Agreement and to the
fullest extent permitted by applicable law in effect on the date
hereof and to such greater extent as applicable law may thereafter
from time to time permit.
(b) Proceedings Other Than
Proceedings by or in the Right of the Company . Indemnitee
shall be entitled to the rights of indemnification provided in this
Section 4(b) if, by reason of Indemnitee’s Corporate Status,
Indemnitee is, or is threatened to be made, a party to any
Proceeding, other than a Proceeding by or in the right of the
Company. Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlements
actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in Good Faith
including without limitation, any and all losses, claims, damages,
expenses and liabilities, joint or several (including any
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit,
proceeding or any claim asserted) under the Securities Act of 1933,
the Securities Exchange Act of 1934, as amended (the
“Exchange Act of 1934”) or other federal or state
statutory law or regulation, at common law or otherwise or which
relate directly or indirectly to the registration, purchase, sale
or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto or as a direct or indirect
result of any Proceeding or any claim, issue or matter therein made
by any stockholder of the Company against Indemnitee and arising
out of or related to any round of financing of the Company
(including but not limited to Proceedings or any claims, issues or
matters therein regarding non-participation, or non-pro rata
participation, in such round by such stockholder), or made by a
third party against Indemnitee based on any misstatement or
omission of a material fact by the Company in violation of any duty
of disclosure imposed on the Company by federal or state securities
or common laws.
(c) Proceedings by or in the Right
of the Company . Indemnitee shall be entitled to the rights of
indemnification provided in this Section 4(c) if, by reason of
Indemnitee’s Corporate Status, Indemnitee is or is threatened
to be made a party to any Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Indemnitee shall be
indemnified against Expenses, judgments, penalties and amounts paid
in settlement, actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding if
Indemnitee acted in Good Faith. Notwithstanding the foregoing, no
such indemnification shall be made in respect of any claim, issue
or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits
such indemnification; provided , however , that, if
applicable law so permits, indemnification shall nevertheless be
made by the Company in such event if and only to the extent that
the Court of Chancery of the State of Delaware, or the court in
which such Proceeding shall have been brought or is pending, shall
determine.
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(d) Indemnification of a Party Who
is Wholly or Partly Successful . Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by
reason of Indemnitee’s Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding,
Indemnitee shall be indemnified to the maximum extent permitted by
law against all Expenses, judgments, penalties, fines and amounts
paid in settlement, actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee to the maximum extent permitted by law,
against all Expenses, judgments, penalties, fines and amounts paid
in settlement, actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section 4(d)
and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter, so long as there has been no finding
(either adjudicated or pursuant to Section 6) that Indemnitee
did not act in Good Faith.
(e) Indemnification for Expenses
of a Witness . Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of
Indemnitee’s Corporate Status, a witness in any Proceeding,
Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection therewith.
(f) Assumption of Defense and
Settlement . Notwithstanding any other provision of this
Agreement, with respect to any such Proceeding as to which the
Indemnitee gives notice to the Company of the commencement
thereof:
(1) the Company will be entitled to
participate therein at its own expense;
(2) the Company, jointly with any
other indemnifying party similarly notified, shall be entitled to
assume the defense thereof, with counsel satisfactory to the
Indemnitee. If the Company assumes the defense of the Indemnitee,
it shall notify the Indemnitee, and after the Indemnitee receives
such notice, the Company shall not be liable to the Indemnitee
under this Agreement for any Expenses incurred by the Indemnitee
after the date such notice was received. The Indemnitee shall be
entitled to employ Indemnitee’s own counsel at
Indemnitee’s own expense. Nevertheless, the Company shall pay
for Indemnitee’s own counsel if (1) the Company agrees
to do the same, (2) the Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the
Company and the Indemnitee regarding the defense of such action, or
(3) the Company shall not in fact have employed counsel to
assume the defense of the Proceeding. The Company shall not be
entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which the Indemnitee shall have
reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee regarding the defense of
such Proceeding; and
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(3) the Company shall not be liable
to the Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding unless the Company
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