INDEMNIFICATION
AGREEMENT
ADEONA PHARMACEUTICALS,
INC.
THIS
INDEMNIFICATION AGREEMENT (the “ Agreement ”) is
made and entered into as of December 30, 2008, between ADEONA
PHARMACEUTICALS, INC., a Delaware corporation (the “
Corporation ”), and the undersigned director and/or
officer of the Corporation (“ Indemnitee ”).
Defined terms shall have the meaning ascribed to them in
Section 0 below.
Indemnitee is a
member of the Board of Directors and/or an officer of the
Corporation and as such performs a valuable service for the
Corporation. To induce Indemnitee to continue to serve on the Board
of Directors and/or as an officer, the Corporation has agreed to
provide to Indemnitee the indemnifications and other rights
described herein. The Corporation enters this Agreement pursuant to
the authority contained in its Certificate of Incorporation and
Bylaws and the provisions of the General Corporation Law of the
State of Delaware (the “ DGCL ”). Specifically,
with respect to the DGCL, the Corporation enters this Agreement
relying on the provision stating that indemnification authorized by
the DGCL is not exclusive.
The
Corporation’s Certificate of Incorporation includes a
provision eliminating or limiting the personal liability of a
director to the Corporation pursuant to paragraph (7) of
subsection (b) of Section 102 of the DGCL and, as a result,
the DGCL permits the Corporation to indemnify and advance expenses
to the Indemnitee so long as the Indemnitee has not breached his or
her duty of loyalty to the Corporation or its stockholders,
committed acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, violated
Section 174 of the DGCL or entered into transactions from
which the Indemnitee derived an improper personal benefit. The
Corporation desires to provide to Indemnitee the additional
indemnification rights set forth in this Agreement, and Indemnitee
desires to obtain such rights, all upon the terms and subject to
the conditions set forth in this Agreement.
The Board of
Directors of the Corporation (the “ Board ”) has
determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the
Corporation’s stockholders and that the Corporation should
act to assure such persons that there will be increased certainty
of such protection in the future. The Board has also determined
that it is reasonable, prudent and necessary for the Corporation
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
Corporation free from undue concern that they will not be so
indemnified.
This Agreement is
intended as a supplement to and in furtherance of the By-laws of
the Corporation and any resolutions adopted pursuant thereto, and
shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder, and Indemnitee does
not regard the protection available under the Corporation’s
By-laws and insurance as adequate in the present circumstances, and
may not be willing to serve as an officer or a director without
adequate protection, and the Corporation 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
Corporation on the condition that he or she be so
indemnified.
NOW, THEREFORE, in
consideration of Indemnitee’s agreement to serve as a
director and/or officer of the Corporation as of and after the date
hereof, the parties hereto agree as follows:
1.
Indemnity of Indemnitee . The Corporation 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)
Proceedings Other Than Proceedings by or in the Right of the
Corporation . Indemnitee shall be entitled to the rights of
indemnification provided in this Section 1(a) if, by
reason of his or her Corporate Status, the Indemnitee is, or is
threatened to be made, a party to or participant in any Proceeding
other than a Proceeding by or in the right of the Corporation.
Pursuant to this Section 1(a) , Indemnitee shall be
indemnified against all Expenses, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him
or her, or on his or her 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 Corporation, 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 Corporation .
Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(b) if, by reason of his or
her Corporate Status, 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 Corporation. 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 Corporation; 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
Corporation unless and to the extent that a court of competent
jurisdiction 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 or
her Corporate Status, a party to and is successful, on the merits
or otherwise, in any Proceeding, he or she 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 her or on his or her 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
Corporation shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or her or on his or her
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 Corporation 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 her or on his
or her behalf if, by reason of his Corporate Status, he or she 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
Corporation), 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
Corporation’s obligations pursuant to this Agreement shall be
that the Corporation 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 hereto) to be unlawful.
(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 Corporation is
jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), the Corporation 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 Corporation hereby waives and
relinquishes any right of contribution it may have against
Indemnitee. The Corporation shall not enter into any settlement of
any action, suit or proceeding in which the Corporation 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 Corporation 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 Corporation is jointly
liable with Indemnitee (or would be if joined in such action, suit
or proceeding), the Corporation 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 Corporation and all directors of the
Corporation, 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 Corporation and all directors of the Corporation 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 applicable
law may require to be considered. The relative fault of the
Corporation and all directors of the Corporation, 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
Corporation hereby agrees to fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought by
directors of the Corporation, 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 Corporation, 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 Corporation
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 Corporation (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 or her Corporate
Status, a witness in any
Proceeding to
which Indemnitee is not a party, he or she shall be indemnified
against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection therewith.
5.
Limitations . The Corporation 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 0 and 0 hereof) to be unlawful.
Additionally, the Corporation shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise
taxes and penalties, and amounts paid in settlement) for which
payment is actually made to or on behalf of Indemnitee under a
valid and collectible insurance policy of D&O Insurance of the
Corporation, or under a valid and enforceable indemnity clause,
by-law or agreement of the Corporation.
6.
Advancement of Expenses . Notwithstanding any other
provision of this Agreement, the Corporation shall advance all
Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding by reason of Indemnitee’s Corporate Status
within thirty (30) days after the receipt by the Corporation
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 0 shall be unsecured and
interest free. Indemnitee hereby undertakes to repay amounts
advanced only if, and to the extent that, it shall be determined
ultimately that the Indemnitee is not entitled to indemnification
or contribution by the Corporation as authorized hereby.
7.
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
the Corporation’s incorporation. 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 Corporation 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 Corporation 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 7(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, except as provided in the
sentence below, shall be at the election of the Board: (1) by
a majority vote of the disinterested directors, 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 Corporation. Notwithstanding the
above sentence, and to the extent allowed by applicable law, in the
event of a Change of Control, the determination with respect to an
Indemnitee’s entitlement to indemnification shall be made by
independent legal counsel in a written opinion to the Board, a copy
of which shall be delivered to the Indemnitee. For purposes hereof,
disinterested directors are those members of the Board who are not
parties to the action, suit or proceeding in respect of which
indemnification is sought by Indemnitee.
(c) If
the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 7(b) hereof,
the Independent Counsel shall be selected as provided in this
Section 7(c) . The Independent Counsel shall be
selected by the Board. Indemnitee may, within 10 days after
such written notice of selection shall have been given, deliver to
the Corporation, as the case may be, 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 14 of this Agreement, and 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 7(a) hereof, no Independent Counsel shall have
been selected and not objected to, either the Corporation or
Indemnitee may petition a court of competent jurisdiction for
resolution of any objection which shall have been made by the
Indemnitee to the Corporation’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 7(b) hereof. The Corporation
shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 7(b) hereof, and, unless a
court of competent jurisdiction finds that each of the claims
and/or defenses of the Indemnitee in any such proceeding was
frivolous or made in bad faith, the Corporation shall pay all
reasonable fees and expenses incident to the procedures of this
Section7(c) , regardless of the manner in which such
Independent Counsel was selected or appointed.
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