Exhibit 10.3

 

FORM OF

INNOVATE BIOPHARMACEUTICALS, INC.

DIRECTOR INDEMNIFICATION AGREEMENT

 

This Director Indemnification Agreement (this “Agreement”) is entered into
effective as of _______________ __, 2018 by and between Innovate
Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), and the
director of the Company identified on the signature page hereto (the “Director”
and collectively with such Director’s Affiliated Persons, as defined below, the
“Indemnitees”).

 

RECITALS

 

A.           The Company and Director recognize the continued difficulty in
obtaining liability insurance for its directors, the significant increases in
the cost of such insurance and the general reductions in the coverage of such
insurance.

 

B.           The Company and Director further recognize the substantial increase
in corporate litigation in general, subjecting directors to expensive litigation
risks at the same time as the availability and coverage of liability insurance
has been severely limited.

 

C.           The current protection available to directors may not be adequate
under the present circumstances, and directors, including the Director, may not
be willing to continue to serve or be associated with the Company in such
capacities without additional protection for themselves and their Affiliated
Persons.

 

D.           The Company (i) desires to attract and retain the involvement of
highly qualified persons, such as Indemnitees, to serve and be associated with
the Company, and (ii) accordingly, wishes to provide for the indemnification and
advancement of expenses to the Director and the Director’s Affiliated Persons as
provided herein.

 

   

 

 

AGREEMENT

 

NOW, THEREFORE, the Company and the Director hereby agree as follows:

 

1.           Indemnification.

 

(a)          Indemnification of Expenses. The Company shall indemnify and hold
harmless the Director and all of the Director’s Affiliated Persons (as defined
below) to the fullest extent permitted by law if any such Indemnitee was or is
or becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that such Indemnitee in good faith
believes might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a “Claim”) by reason of (or
arising in part out of) any event or occurrence related to the fact that
Director is or was (or is alleged to be or to have been) a director, controlling
person, fiduciary or other agent or affiliate of the Company, or any subsidiary
of the Company, or is or was (or is alleged to be or to have been) serving at
the request of the Company as a director, officer, employee, fiduciary or other
agent or affiliate of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action or inaction on the part of such
Indemnitee while serving (or allegedly serving) in such capacity, including,
without limitation, any such Claim under the Securities Act of 1933, as amended
(the “Securities Act”), the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any other federal or state statutory law or regulation, or
any such Claim, at common law or otherwise, that relates directly or indirectly
(i) to the registration, purchase, sale or ownership of any securities of the
Company or (ii) to any fiduciary obligation owed with respect to the Company and
its stockholders (hereinafter an “Indemnification Event”), against any and all
losses, claims, damages, expenses and liabilities, joint or several, incurred in
connection with such Claim (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) any such Claim and against any and all expenses,
including attorneys’ fees and all other costs, expenses and obligations incurred
in connection with investigating, defending a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate
in, any action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation related to such Claim), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter “Expenses”), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses.
The Company shall make such payment of Expenses as soon as practicable but in
any event no later than ten (10) days after written demand by the Indemnitee
therefor is presented to the Company.

 

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(b)          Reviewing Party. Notwithstanding the foregoing, (i) the obligations
of the Company under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined in Section 10(e) hereof) shall not have determined
(in a written opinion, in any case in which the Independent Legal Counsel
referred to in Section 10(d) hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an advance payment of Expenses to Indemnitee pursuant to Section
2(a) (an “Expense Advance”) shall be subject to the condition that, if, when and
to the extent that the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law or hereunder, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be indemnified under
applicable law or hereunder shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). Indemnitees’ obligation to reimburse
the Company for any Expense Advance shall be unsecured and no interest shall be
charged thereon. If there has not been a Change in Control (as defined in
Section 10(c) hereof), the Reviewing Party shall be selected by the Board of
Directors with the approval of the Indemnitee (which approval shall not be
unreasonably withheld), and if there has been such a Change in Control (other
than a Change in Control (i) which has been approved by a majority of the
Company’s Board of Directors prior to such Change in Control or (ii) following
which a majority of the Board of Directors of the Company (or the ultimate
parent entity thereof) is comprised of directors who were directors of the
Company immediately prior to the Change in Control), the Reviewing Party shall
be the Independent Legal Counsel referred to in Section 10(d) hereof subject to
the approval of the Indemnitee (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitees as to whether and to what extent Indemnitees would
be permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Independent Legal Counsel referred to above and to
fully indemnify such counsel against any and all expenses (including attorneys’
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence litigation seeking
an initial determination by the court or challenging any such determination by
the Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise (e.g.,
the court in the case of litigation by Indemnitee) shall be conclusive and
binding on the Company and Indemnitee.

 

(c)          Contribution. If the indemnification provided for in Section 1(a)
above for any reason is held by a court of competent jurisdiction to be
unavailable to an Indemnitee in respect of any Claims referred to therein, then
the Company, in lieu of indemnifying such Indemnitee thereunder, shall
contribute to the amount paid or payable by such Indemnitee as a result of such
losses, claims, damages, expenses or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Indemnitees, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Indemnitee in connection with the action or
inaction which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. In
connection with the registration of the Company’s securities, the relative
benefits received by the Company and any Indemnitee shall be deemed to be in the
same respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the Indemnitee, in each case as
set forth in the table on the cover page of the applicable prospectus, bear to
the aggregate public offering price of the securities so offered. The relative
fault of the Company and any Indemnitee shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Indemnitee and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

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The Company and each Indemnitee agree that it would not be just and equitable if
contribution pursuant to this Section 1(c) were determined by pro rata or per
capita allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. In connection with the registration of the Company’s securities, in
no event shall an Indemnitee be required to contribute any amount under this
Section 1(c) in excess of the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement which
is being sold by such Indemnitee, or (ii) the net proceeds received by such
Indemnitee from its sale of securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.

 

(d)          Survival Regardless of Investigation. The indemnification and
contribution provided for in this Section 1 will remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnitees or any
officer, director, employee, agent or controlling person of the Indemnitees.

 

(e)          Mandatory Payment of Expenses. Notwithstanding any other provision
of this Agreement, to the extent that an Indemnitee has been successful on the
merits or otherwise, including, without limitation, the dismissal of an action
without prejudice, in the defense of any action, suit, proceeding, inquiry or
investigation referred to in Section (1)(a) hereof or in the defense of any
claim, issue or matter therein, such Indemnitee shall be indemnified against all
Expenses incurred by such Indemnitee in connection therewith.

 

2.           Expenses; Indemnification Procedure.

 

(a)          Advancement of Expenses. The Company shall advance all Expenses
incurred by any Indemnitee. The advances to be made hereunder shall be paid by
the Company to the Indemnitee as soon as practicable but in any event no later
than ten (10) days after written demand by such Indemnitee therefor to the
Company.

 

(b)          Notice/Cooperation by Indemnitees. Each Indemnitee shall, as a
condition precedent to Indemnitee’s right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. In addition, each Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee’s power.

 

(c)          No Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that any Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether an Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that the
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that the Indemnitee should be indemnified under
applicable law, shall be a defense to the Indemnitee’s claim or create a
presumption that the Indemnitee has not met any particular standard of conduct
or did not have any particular belief. In connection with any determination by
the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that the Indemnitee is not so entitled.

 

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(d)          Notice to Insurers. If, at the time of the receipt by the Company
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. If the Company has not
paid such amounts directly, the Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of each Indemnitee,
all amounts payable as a result of such action, suit, proceeding, inquiry or
investigation in accordance with the terms of such policies.

 

(e)          Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company shall be entitled to
assume the defense of such Claim, with counsel approved by the applicable
Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to such Indemnitee of written notice of its election to do so. After delivery of
such notice, approval of such counsel by the Indemnitee and the retention of
such counsel by the Company, the Company will not be liable to such Indemnitee
under this Agreement for any fees of counsel subsequently incurred by such
Indemnitee with respect to the same Claim; provided that, (i) the Indemnitee
shall have the right to employ such Indemnitee’s counsel in any such Claim at
the Indemnitee’s expense and (ii) if (A) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (B) such Indemnitee
shall have reasonably concluded that there is an actual or potential conflict of
interest between the Company and such Indemnitee in the conduct of any such
defense, or (C) the Company shall not continue to retain such counsel to defend
such Claim, then the fees and expenses of the Indemnitee’s counsel shall be at
the expense of the Company. As long as the Company has otherwise complied with
the terms hereof, the Company shall have the right to conduct such defense as it
sees fit in its sole discretion, including the right to settle any claim, action
or proceeding against any Indemnitee without the consent of such Indemnitee,
provided such settlement includes a full release of the Indemnitee by the
claimant from all liabilities or potential liabilities under such claim.

 

3.           Additional Indemnification Rights; Nonexclusivity.

 

(a)          Scope. The Company hereby agrees to indemnify each Indemnitee to
the fullest extent permitted by law and in accordance with the terms hereof,
notwithstanding that such indemnification may not be specifically authorized by
the Company’s Articles of Incorporation, the Company’s Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify a
member of its Board of Directors, it is the intent of the parties hereto that
each Indemnitee shall enjoy by this Agreement the greater benefits afforded by
such change. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
Board of Directors or agent or fiduciary, such change, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties’ rights and obligations
hereunder except as set forth in Section 8(a) hereof.

 

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(b)          Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which any Indemnitee may be entitled under
the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote
of stockholders or disinterested directors, the Delaware Corporations Code, or
otherwise. The indemnification provided under this Agreement shall continue as
to each Indemnitee for any action such Indemnitee took or did not take while
serving in an indemnified capacity even though the Indemnitee may have ceased to
serve in such capacity.

 

4.           No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against any
Indemnitee to the extent such Indemnitee has otherwise actually received payment
(under any insurance policy, Articles of Incorporation, the Bylaws or otherwise)
of the amounts otherwise indemnifiable hereunder.

 

5.           Partial Indemnification. If any Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for any portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which such Indemnitee is entitled.

 

6.           Mutual Acknowledgment. The Company and each Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, controlling persons, fiduciaries or
other agents or affiliates under this Agreement or otherwise. Each Indemnitee
understands, acknowledges and agrees that the Company has undertaken or may be
required in the future to undertake with the Securities and Exchange Commission
to submit the question of indemnification to a court in certain circumstances
for a determination of the Company’s rights under public policy to indemnify the
Indemnitees, notwithstanding any provision hereof to the contrary.

 

7.           Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, control persons,
fiduciaries or other agents and affiliates, the Indemnitee shall be covered by
such policies in such a manner as to provide to the Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company’s
directors, if such Indemnitee is a director, or of the Company’s officers, if
such Indemnitee is not a director of the Company but is an officer; or of the
Company’s controlling persons, fiduciaries or other agents or affiliates, if
such Indemnitee is not an Officer or director but is a control person,
fiduciary, agent or affiliate.

 

8.           Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

 

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(a)          Excluded Action or Omissions. To indemnify any Indemnitee for any
intentional malfeasance by the Indemnitee or any act undertaken by the
Indemnitee where the Indemnitee did not in good faith believe the Indemnitee was
acting in the best interests of the Company, or for any other acts, omissions or
transactions from which the Indemnitee may not be relieved of liability under
applicable law;

 

(b)          Claims Initiated by Indemnitee. To indemnify or advance expenses to
any Indemnitee with respect to Claims initiated or brought voluntarily by such
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings to establish or enforce a right to indemnify under this Agreement or
any other agreement or insurance policy or under the Company’s Certificate of
Incorporation or Bylaws now or hereafter in effect relating to Claims for
Indemnification Events, (ii) in specific cases if the Board of Directors has
approved the initiation or bringing of such Claim, or (iii) as otherwise
required under the Delaware Corporations Code, regardless of whether such
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be;

 

(c)          Lack of Good Faith. To indemnify any Indemnitee for any expenses
incurred by such Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

 

(d)          Claims Under Section 16(b). To indemnify any Indemnitee for
expenses and the payment of profits arising from the purchase and sale by such
Indemnitee of securities in violation of Section 16(b) of the Exchange Act or
any similar successor statute.

 

9.           [Intentionally Omitted.]

 

10.         Construction of Certain Phrases.

 

(a)          For the purposes of this Agreement, an "Affiliated Person" of an
Indemnitee shall include any director, officer, employee, controlling person
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), agent or fiduciary of the Indemnitee, any stockholder of the
Company for whom Indemnitee serves as a director, officer, employee, controlling
person, agent or fiduciary, and any partnership, corporation, limited liability
company, association, joint stock company, trust or joint venture controlling,
controlled by or under common control with such a stockholder. For these
purposes, “control” means the possession, directly or indirectly, of the power
to direct management and policies of a person or entity, whether through the
ownership of voting securities, contract or otherwise.

 

(b)          For purposes of this Agreement, references to the “Company” shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents, fiduciaries
and other Affiliated Persons, so that if Indemnitee is or was a director,
officer, employee, agent, control person, fiduciary or an Affiliated Person of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, control person, agent
or fiduciary or another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, such Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as such Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

 

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(c)          For purposes of this Agreement a “Change in Control” shall be
deemed to have occurred if after the date of this Agreement (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, (A) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company’s then outstanding Voting Securities, or (B) becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company’s then outstanding Voting Securities,
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors 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 a majority thereof,
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 60% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of transactions)
all or substantially all of the Company’s assets.

 

(d)          For purposes of this Agreement, “Independent Legal Counsel” shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(b) hereof, who shall not have otherwise performed
services for the Company or any Indemnitee within the last three years (other
than with respect to matters concerning the right of any Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).

 

(e)          For purposes of this Agreement, a “Reviewing Party” shall mean any
appropriate person or body consisting of a member or members of the Company’s
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which an Indemnitee is
seeking indemnification, or Independent Legal Counsel.

 

(f)          For purposes of this Agreement, “Voting Securities” shall mean any
securities of the Company that vote generally in the election of directors.

 

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11.         Company as Primary Indemnitor. Notwithstanding anything to the
contrary in this Agreement, the Company hereby acknowledges that an Indemnitee
may have certain rights to indemnification, advancement of expenses and/or
insurance provided by other sources. The Company hereby agrees with respect to
any Indemnification Event (i) that it (or, to the extent applicable, its
insurance provider) is the indemnitor of first resort (i.e., its obligations to
an Indemnitee are primary and any obligation of such other sources to advance
expenses or to provide indemnification for the same expenses or liabilities
incurred by such Indemnitee are secondary) and (ii) that it shall be required to
advance the full amount of Expenses incurred by an Indemnitee and shall be
liable for the full amount of all Expenses to the extent legally permitted and
as required by the terms of this Agreement without regard to any rights an
Indemnitee may have against such other sources. The Company further agrees that
no advancement or payment by such other sources on behalf of an Indemnitee with
respect to any Claim for which such Indemnitee has sought indemnification from
the Company shall affect the foregoing, and such other sources shall have a
right of contribution and/or be subrogated to the extent of such advancement or
payment to all of the rights of recovery of such Indemnitee against the Company
with respect to the Indemnification Event.

 

12.         Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

 

13.         Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company (and the Company
may assign its rights and obligations under this Agreement in connection with
any such transaction without the consent of any Indemnitee), spouses, heirs, and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to each Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnification Events
regardless of whether any Indemnitee continues to serve as a director, officer,
employee, agent, controlling person, or fiduciary of the Company or of any other
enterprise at the Company’s request.

 

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14.         Attorneys’ Fees. Subject to the other provisions of this Agreement,
in the event that any action is instituted by an Indemnitee under this Agreement
or under any liability insurance policies maintained by the Company to enforce
or interpret any of the terms hereof or thereof, any Indemnitee shall be
entitled to be paid all expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection with investigating, defending a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in, any such action) incurred by such Indemnitee
with respect to such action, regardless of whether such Indemnitee is ultimately
successful in such action, and unless, as part of such action, a court of
competent jurisdiction determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous. In connection with such action, Indemnitee shall be entitled to the
advancement of expenses (including attorneys’ fees and all other costs, expenses
and obligations incurred in connection investigating, defending a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action) with respect to such action, unless, as a
part of such action, a court of competent jurisdiction over such action
determines that each of the material assertions made by such Indemnitee as a
basis for such action was not made in good faith or was frivolous. In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, the Indemnitee shall be
entitled to be paid all expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection investigating, defending a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in, any such action) incurred by such Indemnitee in
defense of such action (including costs and expenses incurred with respect to
Indemnitee counterclaims and cross-claims made in such action), and shall be
entitled to the advancement of expenses (including attorneys’ fees and all other
costs, expenses and obligations incurred in connection investigating, defending
a witness in or participating in (including on appeal), or preparing to defend,
be a witness in or participate in, any such action) with respect to such action,
unless, as a part of such action, a court having jurisdiction over such action
determines that each of such Indemnitee’s material defenses to such action was
made in bad faith or was frivolous.

 

15.         Notice. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon the earlier of receipt
or (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid,
(b) upon delivery, if delivered by hand, (c) one business day after the business
day of deposit with Federal Express or similar overnight courier, freight
prepaid, or (d) one business day after the day of delivery by facsimile
transmission, if deliverable by facsimile transmission, with copy by first class
mail, postage prepaid, and shall be addressed if to an Indemnitee at the
Indemnitee’s address as set forth beneath the Indemnitee’s signature to this
Agreement, and if to the Company at the address of its principal corporate
offices (attention: Chief Executive Officer) or at such other address as such
party may designate by ten days’ advance written notice to the other party
hereto.

 

16.         Consent to Jurisdiction. The Company and each Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in courts located in
Wilmington, Delaware, which shall be the exclusive and only proper forum for
adjudicating such a claim.

 

17.         Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

 

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18.         Choice of Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, without regard to the conflict of laws principles thereof.

 

19.         Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of each Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company effectively to bring suite to enforce such rights.

 

20.         Third Party Beneficiaries. Each Indemnitee is an intended third
party beneficiary of this Agreement.

 

21.         Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by the Company and the Director, whereupon all Indemnitees shall be
bound. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

 

22.         Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto,
including, but not limited to, any Indemnification Agreement executed by the
parties hereto prior to the date hereof.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

COMPANY INNOVATE BIOPHARMACEUTICALS, INC.,   a Delaware corporation

 

  By:   

 

DIRECTOR     Signature

  

  Name:  

 

  Address:  

 

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