Exhibit 10.2
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement
(“Agreement”) is made as of
, 20__, by and between TRANSCEPT PHARMACEUTICALS, INC., a Delaware
corporation (the “Company”), and
(“Indemnitee”).
RECITALS
WHEREAS, highly competent persons
have become more reluctant to serve publicly-held corporations as
directors, officers or in other capacities 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 By-laws of
the Company 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 By-laws 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 By-laws of the Company 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 Company’s By-laws and
insurance as adequate in the present circumstances, and may not be
willing to serve as an officer or director without adequate
protection, and the Company desires Indemnitee to serve 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
[WHEREAS, the Company entered into
that certain Indemnification Agreement with the Indemnitee, dated
as of
(the “Prior Agreement”), and the Company and the
Indemnitee desire this Agreement to supersedes the Prior Agreement
and any other existing indemnification agreement between Indemnitee
and the Company.]
WHEREAS, the Indemnitee has certain
rights to indemnification and/or insurance provided by [Name of
Fund/Sponsor] which the Indemnitee and [Name of Fund/Sponsor]
intend to be secondary to the primary obligation of the Company to
indemnify the Indemnitee as provided herein, with the
Company’s acknowledgement and agreement to the foregoing
being a material condition to the Indemnitee’s willingness to
serve on the Board.
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
Section 1. Services to the
Company. Indemnitee will serve or continue to serve as an
officer, director or key employee of the Company for so long as
Indemnitee is duly elected or appointed or until Indemnitee tenders
his resignation or is terminated by the Company.
Section 2. Definitions. As
used in this Agreement:
(a) A “Change in
Control” shall be deemed to occur upon the earliest to occur
after the date of this Agreement of any of the following
events:
i. Acquisition of Stock by Third
Party. Any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of
the Company representing thirty percent (30%) or more of the
combined voting power of the Company’s then outstanding
securities;
ii. Change in Board of Directors.
During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose
election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the members of the
Board;
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iii. Corporate Transactions. The
effective date of a merger or consolidation of the Company with any
other entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 51% of
the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation
and with the power to elect at least a majority of the board of
directors or other governing body of such surviving
entity;
iv. Liquidation. The approval by the
stockholders of the Company of a complete liquidation of the
Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets;
and
v. Other Events. There occurs any
other event of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or a
response to any similar item on any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or
not the Company is then subject to such reporting
requirement.
For purposes of this
Section 2(a), the following terms shall have the following
meanings:
(A) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
(B) “Person” shall have
the meaning as set forth in Sections 13(d) and 14(d) of the
Exchange Act; provided, however, that Person shall exclude
(i) the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
and (iii) any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(C) “Beneficial Owner”
shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act; provided, however, that Beneficial Owner shall
exclude any Person otherwise becoming a Beneficial Owner by reason
of the stockholders of the Company approving a merger of the
Company with another entity.
(b) “Corporate Status”
describes the status of a person who is or was a director, officer,
employee or agent of the Company or of any other corporation,
limited liability company, partnership or joint venture, trust,
employee benefit plan or other enterprise which such person is or
was serving at the request of the Company.
(c) “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.
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(d) “Enterprise” shall
mean the Company and any other corporation, limited liability
company, partnership, joint venture, trust, employee benefit plan
or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, employee, agent or
fiduciary.
(e) “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, or
otherwise participating in, a Proceeding. Expenses also shall
include (i) Expenses incurred in connection with any appeal
resulting from any Proceeding, including without limitation the
premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent, and
(ii) for purposes of Section 13(d) only, Expenses
incurred by Indemnitee in connection with the interpretation,
enforcement or defense of Indemnitee’s rights under this
Agreement, by litigation or otherwise. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(f) “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 (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), 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. The Company agrees
to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any
and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant
hereto.
(g) The term
“Proceeding” shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought
in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which
Indemnitee was, is or will be involved as a party or otherwise by
reason of the fact that Indemnitee is or was a director or officer
of the Company, by reason of any action taken by him or of any
action on his part while acting as director or officer of the
Company, or by reason of the fact that he is or was serving at the
request of the Company as a director, officer, employee or agent of
another corporation, limited liability company, partnership, joint
venture, trust or other enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is
incurred for which indemnification, reimbursement, or advancement
of expenses can be provided under this Agreement; except one
initiated by an Indemnitee to enforce his rights under this
Agreement.
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(h) Reference to “other
enterprise” shall include employee benefit plans; references
to “fines” shall include any excise tax assessed with
respect to any employee benefit plan; references to “serving
at the request of the Company” shall include any service as a
director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the best interests
of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in manner “not opposed to the
best interests of the Company” as referred to in this
Agreement.
Section 3. Indemnity in
Third-Party Proceedings. The Company shall indemnify Indemnitee
in accordance with the provisions of this Section 3 if
Indemnitee is, or is threatened to be made, a party to or a
participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant
to this Section 3, Indemnitee shall be indemnified to the
fullest extent permitted by applicable law against all Expenses,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal proceeding had no reasonable
cause to believe that his conduct was unlawful.
Section 4. Indemnity in
Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of
this Section 4 if Indemnitee is, or is threatened to be made,
a party to or a participant in any Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to this
Section 4, Indemnitee shall be indemnified to the fullest
extent permitted by applicable law against all Expenses actually
and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company. No indemnification for Expenses shall be made under this
Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged by a court to be liable
to the Company, unless and only to the extent that the Delaware
Court of Chancery or any court in which the Proceeding was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to
indemnification.
Section 5. Indemnification for
Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the
fullest extent permitted by applicable law and to the extent that
Indemnitee is a party to (or a participant in) and is successful,
on the merits or otherwise, in any Proceeding or in defense of any
claim, issue or matter therein, in whole or in part, the Company
shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him 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. If the Indemnitee is
not wholly successful in such Proceeding, the Company also shall
indemnify Indemnitee against all
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Expenses reasonably incurred in connection with
a claim, issue or matter related to any claim, issue, or matter on
which the Indemnitee was successful. 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.
Section 6. Indemnification For
Expenses of a Witness. Notwithstanding any other provision of
this Agreement, to the fullest extent permitted by applicable law
and to the extent that Indemnitee is, by reason of his Corporate
Status, a witness or a recipient of discovery requests 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.
Section 7. Additional
Indemnification.
(a) Notwithstanding any limitation
in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to
the fullest extent permitted by applicable law if Indemnitee is a
party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to
procure a judgment in its favor) against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with the
Proceeding.
(b) For purposes of
Section 7(a), the meaning of the phrase “to the fullest
extent permitted by applicable law” shall include, but not be
limited to:
i. to the fullest extent permitted
by the provision of the DGCL that authorizes or contemplates
additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL,
and
ii. to the fullest extent authorized
or permitted by any amendments to or replacements of the DGCL
adopted after the date of this Agreement that increase the extent
to which a corporation may indemnify its officers and
directors.
Section 8. Exclusions.
Notwithstanding any provision in this Agreement, the Company shall
not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:
(a) Except as provided in
Section 14(c), for which payment has actually been made to or
on behalf of Indemnitee under any insurance policy or other
indemnity provision, except with respect to any excess beyond the
amount paid under any insurance policy or other indemnity
provision; or
(b) for (i) an accounting of
profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Exchange Act (as defined in
Section 2(a) hereof) or similar provisions of state statutory
law or common law, or (ii) any reimbursement of the Company by
the Indemnitee of any bonus or other incentive-based or
equity-based compensation or of any profits realized by the
Indemnitee from the sale of securities of the Company, as required
in each case under the Exchange Act; or
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(c) except as provided in
Section 13(d) of this Agreement, in connection with any
Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated
by Indemnitee against the Company or its directors, officers,
employees or other indemnitees, unless (i) the Board of
Directors of the Company authorized the Proceeding (or any part of
any Proceeding) prior to its initiation or (ii) the Company
provides the indemnification, in its sole discretion, pursuant to
the powers vested in the Company under applicable law.
Section 9. Advances of
Expenses. Notwithstanding any provision of this Agreement to
the contrary, the Company shall advance, to the extent not
prohibited by law, the Expenses incurred by Indemnitee in
connection with any Proceeding, and such advancement shall be made
within thirty (30) days after the receipt by the Company of a
statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding.
Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay the
Expenses and without regard to Indemnitee’s ultimate
entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses
incurred pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements to
the Company to support the advances claimed. The Indemnitee shall
qualify for advances upon the execution and delivery to the Company
of this Agreement, which shall constitute an undertaking providing
that the Indemnitee undertakes to repay the advance to the extent
that it is ultimately determined that Indemnitee is not entitled to
be indemnified by the Company. This Section 9 shall not apply
to any claim made by Indemnitee for which indemnity is excluded
pursuant to Section 8, except to the extent provided in
Sections 8(c) and 13(d).
Section 10. Procedure for
Notification and Defense of Claim.
(a) Indemnitee shall notify the
Company in writing of any matter with respect to which Indemnitee
intends to seek indemnification or advancement of Expenses
hereunder as soon as reasonably practicable following the receipt
by Indemnitee of written notice thereof. The written notification
to the Company shall include a description of the nature of the
Proceeding and the facts underlying the Proceeding. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the Company a written request, including therein or therewith such
documentation
