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DRAFT
INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (this “
Agreement ”)
is entered into as of ___________, 2008 between Velcera, Inc., a
Delaware corporation (the “
Company ”),
and [_______________] (“
Indemnitee ”).
WHEREAS,
highly competent persons have become more reluctant to serve
corporations as directors, officers, or key employees 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 the corporation;
WHEREAS,
the Board of Directors of the Company (the “
Board ”)
has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities.
Although the furnishing of such insurance has been a customary and
widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions. At the same time, directors, officers, and other
persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that
traditionally would have been brought only against the Company or
business enterprise itself. The bylaws of the Company (the
“
Bylaws ”)
require indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification
pursuant to the General Corporation Law of the State of Delaware
(“
DGCL ”).
The Bylaws and the DGCL expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company
and members of the Board, officers and other persons with respect
to indemnification;
WHEREAS,
the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting
and retaining such persons;
WHEREAS,
the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to 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;
WHEREAS,
it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance
expenses on behalf of, 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;
WHEREAS,
this Agreement is a supplement to and in furtherance of the
Bylaws and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder;
WHEREAS,
Indemnitee does not regard the protection available under the
Bylaws and insurance as adequate in the present circumstances,
and may not be willing to serve or continue serving as an
officer or director without adequate protection, and the
Company desires Indemnitee to serve or to continue to serve,
as the case may be, in such capacity. 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 he be so
indemnified; and
NOW,
THEREFORE, the parties hereto agree as follows:
1.
Indemnity of Indemnitee .
The Company hereby agrees to hold harmless and indemnify Indemnitee
to the fullest extent permitted by law, as such may be amended from
time to time. In furtherance of the foregoing indemnification, and
without limiting the generality thereof:
(a)
Third Party Proceedings .
Indemnitee shall be entitled to the rights of indemnification
provided in this
Section l(a) if,
by reason of his Corporate Service (as hereinafter defined), the
Indemnitee is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company. Pursuant to
this
Section 1(a) ,
Indemnitee shall be indemnified against all Expenses (as
hereinafter defined), judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by him, or on his
behalf, 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.
(b)
Proceedings by or in the Right of the Company
.
Indemnitee shall be entitled to the rights of indemnification
provided in this
Section 1(b) if,
by reason of his Corporate Service, the Indemnitee is, or is
threatened to be made, a party to or participant in any Proceeding
brought by or in the right of the Company. Pursuant to this
Section 1(b) ,
Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by the Indemnitee, or on the Indemnitee’s
behalf, in connection with such Proceeding 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, if applicable law so provides, no
indemnification against such Expenses 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
unless and to the extent that the Court of Chancery of the State of
Delaware shall determine that such indemnification may be
made.
(c)
Indemnification for Expenses 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 his Corporate Service, a
party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the maximum extent permitted
by law, as such may be amended from time to time, against all
Expenses actually and reasonably incurred by him or on his 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 against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 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.
2.
Additional Indemnity .
In addition to, and without regard to any limitations on, the
indemnification provided for in
Section 1 of
this Agreement, the Company shall and hereby does indemnify and
hold harmless Indemnitee against all Expenses, judgments,
penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf if, by reason of his
Corporate Service, he is, or is threatened to be made, a party to
or participant in any Proceeding (including a Proceeding by or in
the right of the Company), including, without limitation, all
liability arising out of the negligence or active or passive
wrongdoing of Indemnitee. The only limitation that shall exist upon
the Company’s obligations pursuant to this Agreement shall be
that the Company shall not be obligated to make any payment to
Indemnitee that is finally determined (under the procedures, and
subject to the presumptions, set forth in
Sections 6 and
7 hereof)
to be unlawful.
3.
Contribution .
(a)
Whether
or not the indemnification provided in
Sections 1 and
2 hereof
is available, 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 pay, in the first instance, the
entire amount of any judgment or settlement of such action, suit or
proceeding without requiring Indemnitee to contribute to such
payment and the Company hereby waives and relinquishes any right of
contribution it may have against Indemnitee. The Company shall not
enter into any settlement of any action, suit or proceeding in
which the Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding) unless such settlement
provides for a full and final release of all claims asserted
against Indemnitee.
(b)
Without
diminishing or impairing the obligations of the Company set
forth in the preceding subparagraph, if, for any reason,
Indemnitee shall elect or be required to pay all or any
portion of any judgment or settlement in 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 proportion to the relative benefits
received by the Company and all officers, directors or
employees of the Company, other than Indemnitee, who are
jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee,
on the other hand, from the transaction from which such
action, suit or proceeding arose; provided, however, that the
proportion determined on the basis of relative benefit may, to
the extent necessary to conform to law, be further adjusted by
reference to the relative fault of the Company and all
officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), on the one
hand, and Indemnitee, on the other hand, in connection with
the events that resulted in such expenses, judgments, fines or
settlement amounts, as well as any other equitable
considerations which the Law may require to be considered. The
relative fault of the Company and all officers, directors or
employees of the Company, other than Indemnitee, who are
jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee,
on the other hand, shall be determined by reference to, among
other things, the degree to which their actions were motivated
by intent to gain personal profit or advantage, the degree to
which their liability is primary or secondary and the degree
to which their conduct is active or passive.
(c)
The
Company hereby agrees to fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought
by officers, directors or employees of the Company, other than
Indemnitee, who may be jointly liable with
Indemnitee.
(d)
To
the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable
to Indemnitee for any reason whatsoever, the Company, in lieu
of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in
such proportion as is deemed fair and reasonable in light of
all of the circumstances of such Proceeding in order to
reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such Proceeding; and/or (ii) the relative
fault of the Company (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s)
and/or transaction(s).
4.
Indemnification for Expenses of a Witness .
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Service, a
witness in any Proceeding to which Indemnitee is not a party, he
shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection
therewith.
5.
Advancement of Expenses .
Notwithstanding any other provision of this Agreement, the Company
shall advance all Expenses incurred by or on behalf of Indemnitee
in connection with any Proceeding by reason of Indemnitee’s
Corporate Service within thirty (30) days after the receipt by the
Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses
advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses. Any advances
and undertakings to repay pursuant to this
Section 5 shall
be unsecured and interest free.
6.
Procedures and Presumptions for Determination of Entitlement to
Indemnification .
It is the intent of this Agreement to secure for Indemnitee rights
of indemnity that are as favorable as may be permitted under the
DGCL and public policy of the State of Delaware. Accordingly, the
parties agree that the following procedures and presumptions shall
apply in the event of any question as to whether Indemnitee is
entitled to indemnification under this Agreement:
(a)
To
obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the
Board in writing that Indemnitee has requested
indemnification.
(b)
Upon
written request by Indemnitee for indemnification pursuant to
the first sentence of
Section 6(a) hereof,
a determination, if required by applicable law, with respect to
Indemnitee’s entitlement thereto shall be made in the
specific case by one of the following three methods, which shall be
at the election of the Board: (1) by a majority vote of the
Disinterested Directors (as hereinafter defined), even though less
than a quorum, by a committee of Disinterested Directors designated
by a majority vote of the Disinterested Directors, even though less
than a quorum, (2) if there are no Disinterested Directors or if
the Disinterested Directors so direct, by independent legal counsel
in a written opinion to the Board, a copy of which shall be
delivered to the Indemnitee, or (3) if so directed by the Board, by
the stockholders of the Company.
(c)
If
the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to
Section 6(b) hereof,
the Independent Counsel shall be selected as provided in
this
Section 6(c) .
The Independent Counsel shall be selected by the Indemnitee,
subject to the approval of the Board, which shall not be
unreasonably withheld. The Company shall, within 10 days after
receiving such written notice of selection from the Indemnitee,
deliver to the Indemnitee a written objection to such selection;
provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the
requirements of “
Independent Counsel ”
as defined in
Section 13 of
this Agreement.. The objection shall set forth with particularity
the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel.
If a written objection is made and substantiated, the Independent
Counsel selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that
such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification
pursuant to
Section 6(a) hereof,
no Independent Counsel shall have been selected and not objected
to, either the Company or Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been
made by the Indemnitee to the Company’s selection of
Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person
as the court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act
as Independent Counsel under
Section 6(b) hereof.
The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to
Section 6(b) hereof,
and the Company shall pay all reasonable fees and expenses incident
to the procedures of this
Section 6(c) ,
regardless of the manner in which such Independent Counsel was
selected or appointed.
(d)
In
making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity
making such determination shall presume that Indemnitee is
entitled to indemnification under this Agreement. Anyone
seeking to overcome this presumption shall have the burden of
proof and the burden of persuasion by clear and convincing
evidence. Neith
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