Document:

EXHIBIT
      10.1

     

    REDEMPTION
      AGREEMENT

     

    This
      agreement is made as of January 30, 2007 between Denali Sciences, Inc., a
      Delaware corporation (“Denali”)
      and
      the holders of common stock in Denali set forth on Schedule
      A
      hereto
      (collectively, the “Sellers”).

     

    The
      Sellers desire to sell to Denali, and Denali desires to re-purchase from each
      Seller, the amount of shares of Denali common stock set forth on Schedule
      A
      opposite
      their names (the “Shares”)
      according to the terms set forth herein.

     

    The
      parties therefore agree as follows:

     

    1. Sale
      of the Shares.
      Subject
      to the terms of this agreement, and in reliance upon the representations,
      warranties, and covenants contained in this agreement, the Sellers shall sell
      the Shares to Denali, and Denali shall re-purchase the Shares from the Sellers,
      for an aggregate amount equal to $125,000 less Denali liabilities as of the
      effective date of the merger between Velcera Pharmaceuticals, Inc.
      (“Velcera”)
      and
      Denali Acquisition Corp., Denali’s wholly-owned subsidiary (“MergerCo”)
      (the
“Merger”),
      multiplied by the percent of outstanding shares of Denali common stock held
      by
      parties to this agreement (the “Purchase
      Price”).
      Each
      Seller shall be entitled to his, her, or its pro
      rata
      share of
      the Purchase Price. 

     

    2. Closing.

     

    (a) The
      purchase and sale of the Shares shall take place at a closing (the “Closing”),
      to
      occur immediately following the closing of the Merger. The parties hereto shall
      have no obligation to complete the Closing in the event the Merger is not
      consummated.

     

    (b) At
      the
      Closing:

     

    (i)
      The
      Sellers shall deliver to Denali certificates representing the Shares, duly
      endorsed in form for transfer to Denali.

     

    (ii)
      Denali shall pay to each Seller such Seller’s pro
      rata
      share of
      the Purchase Price for the Shares.

     

    (iii)
      At
      any time or from time to time after the date hereof, at Denali’s request and
      without further consideration, the Sellers shall execute and deliver to Denali
      such other instruments of sale, transfer, conveyance, assignment and
      confirmation, provide such materials and information and take such other actions
      as Denali may deem necessary, desirable or helpful in order to more effectively
      transfer, convey and assign to Denali, and to confirm Denali’s title to, the
      Shares, and to otherwise carry out the purposes of this agreement. 

     

    3. Representations
      of Sellers.
      Each
      Seller, severally, and not jointly, hereby represents to Denali as
      follows:

    

    a. Each
      Seller is the sole record and beneficial owner of the Shares owned by such
      Seller free and clear of any and all liens, pledges, security interests,
      options, claims, charges, restrictions or encumbrances of any kind or nature
      (“Encumbrances”)
      and
      upon the delivery of the Shares, Denali will receive good and marketable title
      to the Shares free and clear of all Encumbrances. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    b. The
      execution and delivery of this agreement and the consummation of the
      transactions contemplated hereby will not conflict with or result in a breach
      of
      any terms or constitute a default under any agreement or undertaking of
      Seller.

    

    c. To
      each
      Seller’s knowledge, the Shares are not the subject of any litigation or
      injunction. Seller has full power and authority and capacity to transfer the
      Shares.

    

    d. No
      third
      party consent, approval or notification for which Seller is responsible is
      necessary for Seller to effect the transactions contemplated by this
      agreement.

    

    e. Seller
      has had an opportunity to review Denali’s most recent financial statements, its
      corporate records, and the merger agreement related to the Merger. Seller
      further acknowledges to having had the opportunity to ask questions of and
      receive answers from Denali’s officers regarding any matters material to
      Seller’s decision to enter into this agreement. 

    

    f. Seller
      has been encouraged to and has had the opportunity to review the merits of
      the
      sale of the Shares with tax and legal counsel and financial advisors as deemed
      appropriate. 

    

    g. Seller
      either alone, or with the assistance of tax counsel, legal counsel, or other
      financial advisors, has such knowledge and experience in financial and business
      matters to be capable of evaluating the merits and risks of selling the
      Shares.

    

    h. Seller
      has read this agreement in its entirety and is familiar with and acknowledges
      all of the provisions of this agreement including Denali’s
      representations.

    

    4. Representations
      of Denali.
      Denali
      hereby represents to Sellers as follows:

    

    a. Denali
      has full power and authority to enter into this agreement and to perform its
      obligations hereunder.

    

    b. The
      execution, delivery and performance of this agreement by Denali and the
      consummation of the transactions contemplated hereby have been duly and validly
      authorized by all requisite corporate action, and no other corporate proceedings
      are necessary to authorize the execution and delivery of this
      agreement.

    

    c. Denali
      is
      duly organized, validly existing and in good standing under the laws of the
      State of Delaware. Denali has full power and authority to execute and deliver
      this Agreement and to perform its obligations under this agreement. This
      agreement constitutes the valid and legally binding obligation of Denali,
      enforceable in accordance with its terms, subject as to enforcement to
      applicable bankruptcy, insolvency, reorganization, moratorium and other laws
      affecting the rights of creditors generally, to the exercise of judicial
      discretion as to the availability of equitable remedies such as specific
      performance and injunction.

    

    d. To
      Denali’s knowledge, there are no actions, claims or other matters pending or
      threatened against or affecting Denali in respect of the transactions
      contemplated hereby. 

     

    
      
        
        

      

      
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          2
          -

        
          

        

      

      
        
        

      

    

    

    5. Waiver
      and Release.
      Each
      Seller, on behalf of itself, himself, or herself, Seller’s affiliates,
      predecessors, successors, and assigns (all of the foregoing, including Seller,
      the “Seller
      Parties”)
      hereby
      forever, fully, and unconditionally releases and discharges Denali from any
      and
      all obligations, offsets, actions, suits, debts, sums of money, contracts,
      covenants, agreements, promises, legal rights, claims, counterclaims, causes
      of
      action, demands, damages, costs, compensation, liabilities, losses and expenses
      of any nature or of any kind, whether known or unknown, asserted or unasserted,
      liquidated or unliquidated, absolute or contingent, accrued or non-accrued,
      which any of the Seller Parties ever had, now have, hereinafter may have or
      claim to have, whether grounded in law or equity, in contract or in tort, by
      statute or otherwise against Denali or its directors or officers by reason
      of
      any matter whatsoever (collectively, the “Released
      Claims”);
      provided, however, that the Released Claims shall not include any damages,
      liabilities, claims or causes of action arising out of a breach of this
      agreement by Denali. 

    

    6. Miscellaneous.

     

    (a) Notices. All
      notices and other communications hereunder shall be in writing and shall be
      sufficiently given if made by hand delivery, by facsimile, by overnight delivery
      service for next business day delivery, or by registered or certified mail
      (return receipt requested), in each case with delivery charges prepaid, to
      the
      parties at the following addresses (or at such other address for a party as
      shall be specified by it by like notice):

    

    
      	
              If
                to Denali:

            	
              Denali
                Sciences, Inc. 

              c/o
                Paramount BioCapital Investments, LLC

              787
                Seventh Avenue, 48th
                Floor

              New
                York, New York 10019

              Attn:
                Timothy Hofer

              Facsimile:
                (212) 554-4355

            
	 	 
	
              If
                to Sellers:

            	
              At
                each Sellers address as reflected in Denali’s
                records.

            

    

     

    All
      such
      notices and other communications shall be deemed to have been duly given as
      follows: when delivered by hand, if personally delivered, when received; if
      delivered by registered or certified mail (return receipt requested), when
      receipt acknowledged; or if sent by facsimile, on the day of transmission or,
      if
      that day is not a business day, on the next business day; and the next business
      day delivery after being timely delivered to a recognized overnight delivery
      service.

     

    (b) Termination.
      Any party hereto may terminate this agreement if the Closing has not occurred
      on
      or before April 15, 2007 by providing notice as set forth above. In the event
      a
      Seller terminates this agreement, the termination will only be effective with
      respect to that terminating Seller and not the other Sellers.

     

    (c) Severability. If
      any
      term, provision, covenant or restriction in this agreement is held by a court
      of
      competent jurisdiction to be invalid, void or unenforceable, the remainder
      of
      the terms, provisions, covenants and restrictions of this agreement shall remain
      in full force and effect and shall in no way be affected, impaired or
      invalidated, and the parties shall negotiate in good faith to modify this
      agreement and to preserve each party’s anticipated benefits under this
      agreement.

     

    
      
        
        

      

      
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          -

        
          

        

      

      
        
        

      

    

     

    (d) Amendment. This
      agreement may not be amended or modified except by an instrument in writing
      approved by the parties to this agreement and signed on behalf of each of the
      parties hereto.

     

    (e) Waiver. Any
      party
      hereto may (i) extend the time for the performance of any of the obligations
      or
      other acts of the other party hereto or (ii) waive compliance with any of the
      agreements of the other party or with any conditions to its own obligations,
      in
      each case only to the extent such obligations, agreements and conditions are
      intended for its benefit. Any such extension or waiver shall only be effective
      if made in writing and duly executed by the party giving such extension or
      waiver.

     

    (f) Entire
      Agreement; Assignment. This
      agreement: (i) constitutes the entire agreement, and supersedes all other prior
      agreements and undertakings, both written and oral, among the parties, with
      respect to the subject matter hereof; and (ii) shall be binding upon and inure
      to the benefit of the parties hereto and their respective successors and
      assigns, but shall not be assignable by either party hereto without the prior
      written consent of the other party hereto.

     

    (g) Counterparts. This
      agreement may be executed in any number of counterparts, and each such
      counterpart shall be deemed to be an original instrument, but all such
      counterparts together shall constitute but one agreement. Signatures
      delivered by facsimile and other electronic means of transmission shall be
      valid
      and binding to the same extent as original signatures. 

     

    (h) Third
      Party Beneficiaries. Each
      party hereto intends that this agreement,
      except
      as expressly provided herein, shall
      not
      benefit or create any right or cause of action in or on behalf of any person
      other than the parties hereto. 

     

    (i) Governing
      Law.
      This
      agreement is governed by the internal laws of the State of Delaware without
      regard to such state’s principles of conflicts of laws that would defer to the
      substantive laws of another jurisdiction.

     

    (j) Jurisdiction;
      Service of Process.
      Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this agreement must, to the extent such courts will accept
      such
      jurisdiction, be brought
      against any of the
      parties in the courts of the State of Delaware, or, if it has or can acquire
      jurisdiction, in the United States District Court for the District of Delaware,
      and each of the parties consents to the jurisdiction of those courts (and of
      the
      appropriate appellate
      courts) in any such action or proceeding and waives any objection to venue
      laid
      therein. Process
      in any such action or proceeding may be served by sending or delivering a copy
      of the process to the party to be served at the address and in the manner
      provided for the giving of notices
      in Section 6(a). Nothing in this Section 6(j) however,
      affects the right of any party to serve legal process in any other manner
      permitted by law.

    

    Signatures
      appear on next page

     

    
      
        
        

      

      
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          4
          -

        
          

        

      

      
        
        

      

    

    The
      parties hereto are signing this redemption agreement as of the date first above
      written. 

     

    
      	 	 	 
	 	
              DENALI
                SCIENCES, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              Timothy M. Hofer
	 	
              

              Name:
                Timothy Hofer

            
	 	Title:
              Sole Director

    

     

    
      	 	 	 	 
	 	 	 	
              SELLERS

            
	 	 	 	 
	
            	 	 	
              

              Denali
                Stockholders, Names Omitted.

            

    

     

    
      
        
        

      

      
        -
          5
          -EXHIBIT
      10.2

    

    INDEMNITY
      AGREEMENT 

    

    This
      indemnity agreement dated as of February 26, 2007 is between Denali Sciences,
      Inc., a Delaware corporation (“Denali”),
      Velcera Pharmaceuticals, Inc., a Delaware corporation (“Velcera”
and
      together with Denali, the “Companies”),
      and
      Timothy M. Hofer (the “Indemnitee”),
      

     

    Indemnitee
      is the sole director of Denali and is willing to serve, continue to serve and
      to
      take on additional service for or on behalf of Denali on the condition that
      he
      is indemnified as provided herein; and 

     

    It
      is
      intended that the Companies will promptly pay Indemnitee all amounts necessary
      to effectuate in full the indemnity provided herein.

     

    The
      parties hereto agree as follows: 

     

    1. Services
      by Indemnitee.
      Indemnitee agrees to serve as director of Denali, so long as Indemnitee is
      duly
      appointed or elected and qualified in accordance with the applicable provisions
      of Denali’s certificate of incorporation and bylaws, and until such time as
      Indemnitee resigns or fails to stand for election or is removed as director.
      

    

    2. Indemnification.
      Subject
      to the limitations set forth herein and in Section 6 hereof, the Companies
      hereby agree to indemnify Indemnitee as follows: 

    

    The
      Companies shall, with respect to any Proceeding (as hereinafter defined)
      associated with Indemnitee acting in his official capacity as director of Denali
      relating to the consideration, approval or consummation of that
      certain
      Merger
      Agreement
      dated
      January 31, 2007 between Velcera, Denali and Denali Acquisition Corp. (the
      “Merger”),
      indemnify Indemnitee to the fullest extent permitted by Section 145 of the
      General Corporation Law of Delaware (the “DGCL”)
      and
      the certificate of incorporation of Denali in effect on the date hereof or
      as
      such law or certificate of incorporation may from time to time be amended (but,
      in the case of any such amendment, only to the extent such amendment permits
      Denali to provide broader indemnification rights than the law or Certificate
      of
      Incorporation permitted Denali to provide before such amendment).
      Notwithstanding the foregoing, the Companies shall not be required to indemnify
      Indemnitee for acts or omissions of Indemnitee constituting bad faith, gross
      negligence or intentional misconduct, except for actual or alleged gross
      negligence in connection with the scope or depth of the performance of due
      diligence with respect to Velcera and its business. The right to indemnification
      conferred herein and in the certificate of incorporation of Denali shall be
      presumed to have been relied upon by Indemnitee in serving or continuing to
      serve Denali and shall be enforceable as a contract right. Without in any way
      diminishing the scope of the indemnification provided by this Section 2, the
      Companies will indemnify Indemnitee against Expenses (as hereinafter defined)
      and Liabilities (as hereinafter defined) actually and reasonably incurred by
      Indemnitee or on his behalf in connection with the investigation, defense,
      settlement or appeal of such Proceeding. In addition to, and not as a limitation
      of, the foregoing, the rights of indemnification of Indemnitee provided under
      this agreement shall include those rights set forth in Sections 7 below.
      Notwithstanding the foregoing, the Companies shall be required to indemnify
      Indemnitee in connection with a Proceeding commenced by Indemnitee (other than
      a
      Proceeding commenced by Indemnitee to enforce Indemnitee’ rights under this
      agreement) only if the commencement of such Proceeding was authorized by the
      Board of Directors. Notwithstanding anything to the contrary contained herein,
      the Companies shall have no obligation to indemnify Indemnitee to the extent
      such indemnification would not be permitted under Section 145 of the DGCL or
      Denali’s certificate of incorporation in effect on the date hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Presumptions
      and Effect of Certain Proceedings.
      Upon
      making a request for indemnification, Indemnitee shall be presumed to be
      entitled to indemnification under this agreement and the Companies shall have
      the burden of proof to overcome that presumption in reaching any contrary
      determination. The termination of any Proceeding by judgment, order, settlement,
      arbitration award or conviction, or upon a plea of nolo contendere or its
      equivalent shall not affect this presumption or, except as determined by a
      judgment or other final adjudication adverse to Indemnitee, establish a
      presumption with regard to any factual matter relevant to determining
      Indemnitee’s rights to indemnification hereunder. If the person or persons so
      empowered to make a determination pursuant to Section 4 hereof shall have failed
      to make the requested determination within ninety (90) days after any judgment,
      order, settlement, dismissal, arbitration award, conviction, acceptance of
      a
      plea of nolo contendere or its equivalent, or other disposition or partial
      disposition of any Proceeding or any other event that could enable the Companies
      to determine Indemnitee’s entitlement to indemnification, the requisite
      determination that Indemnitee is entitled to indemnification shall be deemed
      to
      have been made. 

     

    4. Procedure
      for Determination of Entitlement to Indemnification.
      

     

    (a) Whenever
      Indemnitee believes that Indemnitee is entitled to indemnification pursuant
      to
      this agreement, Indemnitee shall submit a written request for indemnification
      to
      the Companies. Any request for indemnification shall include sufficient
      documentation or information reasonably available to Indemnitee for the
      determination of entitlement to indemnification. In any event, Indemnitee shall
      submit Indemnitee’s claim for indemnification within a reasonable time, not to
      exceed ninety (90) days after any judgment, order, settlement, dismissal,
      arbitration award, conviction, acceptance of a plea of nolo contendere or its
      equivalent, or final termination, whichever is the later date for which
      Indemnitee requests indemnification. 

     

    (b) Independent
      Legal Counsel (as hereinafter defined) shall determine whether Indemnitee is
      entitled to indemnification. Determination of Indemnitee’s entitlement to
      indemnification shall be made not later than ninety (90) days after the
      Companies’ receipt of Indemnitee’s written request for such indemnification,
      provided that any request for indemnification for Liabilities, other than
      amounts paid in settlement, shall have been made after a determination thereof
      in a Proceeding. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    5. Specific
      Limitations on Indemnification.
      Notwithstanding anything in this agreement to the contrary, the Companies shall
      not be obligated under this agreement to make any payment to Indemnitee with
      respect to any Proceeding: 

     

    (a) To
      the
      extent that payment is actually made to Indemnitee under any insurance policy,
      or is made to Indemnitee by either of the Companies or affiliates otherwise
      than
      pursuant to this agreement. Notwithstanding the availability of such insurance,
      Indemnitee also may claim indemnification from the Companies pursuant to this
      agreement by assigning to the Companies any claims under such insurance to
      the
      extent Indemnitee is paid by the Companies; 

     

    (b) For
      Liabilities in connection with Proceedings settled without the Companies’
consent, which consent, however, shall not be unreasonably withheld;

    

    (c) In
      no
      event shall the Companies be liable to pay the fees and disbursements of more
      than one counsel in any single Proceeding except to the extent that, in the
      opinion of counsel of the Indemnitee, the Indemnitee have conflicting interests
      in the outcome of such Proceeding, or

     

    (d) To
      the
      extent it would be otherwise prohibited by law, if so established by a judgment
      or other final adjudication adverse to Indemnitee. 

     

    6. Fees
      and Expenses of Independent Legal Counsel.
      The
      Companies agree to pay the reasonable fees and expenses of Independent Legal
      Counsel and to fully indemnify such Independent Legal Counsel against any and
      all expenses and losses incurred by any of them arising out of or relating
      to
      this agreement or their engagement pursuant hereto. 

     

    7. Remedies
      of Indemnitee.
      

     

    (a) In
      the
      event that (i) a determination pursuant to Section 4 hereof is made that
      Indemnitee is not entitled to indemnification, (ii) payment has not been timely
      made following a determination of entitlement to indemnification pursuant to
      this agreement, or (iii) Indemnitee otherwise seeks enforcement of this
      agreement, Indemnitee shall be entitled to a final adjudication in the Court
      of
      Chancery of the State of Delaware of the remedy sought.

     

    (b) If
      a
      determination that Indemnitee is entitled to indemnification has been made
      pursuant to Section 4 hereof, or is deemed to have been made pursuant to Section
      4 hereof or otherwise pursuant to the terms of this agreement, the Companies
      shall be bound by such determination in the absence of a misrepresentation
      or
      omission of a material fact by Indemnitee in connection with such determination.
      

     

    (c) The
      Companies shall be precluded from asserting that the procedures and presumptions
      of this agreement are not valid, binding and enforceable. The Companies shall
      stipulate in any such court or before any such arbitrator that the Companies
      are
      bound by all the provisions of this agreement and are precluded from making
      any
      assertion to the contrary. 

     

    
      
         

      

      
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    (d) Expenses
      reasonably incurred by Indemnitee in connection with Indemnitee’s request for
      indemnification under, seeking enforcement of or to recover damages for breach
      of this agreement shall be borne by the Companies when and as incurred by
      Indemnitee.

     

    8. Contribution.
      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 Companies, 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 Companies 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 Companies (and their directors, officers, employees and agents)
      and
      Indemnitee in connection with such event(s) and/or transaction(s). 

     

    9. Modification,
      Waiver, Termination and Cancellation.
      No
      supplement, modification, termination, cancellation or amendment of this
      agreement shall be binding unless executed in writing by both of the parties
      hereto. 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. 

     

    10. Subrogation.
      In the
      event of payment under this agreement, the Companies shall be subrogated to
      the
      extent of such payment to all of the rights of recovery of Indemnitee, who
      shall
      execute all papers required and shall do everything that may be necessary to
      secure such rights, including the execution of such documents necessary to
      enable the Companies effectively to bring suit to enforce such rights.

     

    11. Notice
      by Indemnitee and Defense of Claim.
      Indemnitee shall promptly notify the Companies in writing upon being served
      with
      any summons, citation, subpoena, complaint, indictment, information or other
      document relating to any matter, whether civil, criminal, administrative or
      investigative, but the omission so to notify the Companies will not relieve
      it
      from any liability that it may have to Indemnitee if such omission does not
      prejudice the Companies’ rights. If such omission does prejudice the Companies’
rights, the Companies will be relieved from liability only to the extent of
      such
      prejudice; nor will such omission relieve the Companies from any liability
      that
      it may have to Indemnitee otherwise than under this agreement. 

     

    12. Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing and shall be deemed to have been duly given if (i) delivered by hand
      and
      receipted for by the party to whom said notice or other communication shall
      have
      been directed, or (ii) mailed by certified or registered mail with postage
      prepaid, on the third business day after the date on which it is so mailed:
      

     

    
      	
              (a)
                If to Denali, to:

            	 	
              Denali
                Sciences, Inc.

            
	 	 	
              201
                Corporate Drive

            
	 	 	
              Langhorne,
                Pennsylvania 19047

            
	 	 	
              Attention:
                Dennis F. Steadman

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

       

    

    
      	
              (b)
                If to Velcera, to:

            	 	
              Velcera
                Pharmaceuticals, Inc.

            
	 	 	
              201
                Corporate Drive

            
	 	 	
              Langhorne,
                Pennsylvania 19047

            
	 	 	
              Attention:
                Dennis F. Steadman

            
	 	 	 
	
              (c)
                If to Mr. Hofer, to:

            	 	
              Timothy
                M. Hofer

            
	 	 	
              787
                Seventh Avenue

            
	 	 	
              48th
                Floor

            
	 	 	
              New
                York, New York 10019

            

    

    

    or
      to
      such other address as may have been furnished to Indemnitee by the Companies
      or
      to the Companies by Indemnitee, as the case may be. 

     

    13. Nonexclusivity.
      The
      rights of Indemnitee hereunder shall not be deemed exclusive of any other rights
      to which Indemnitee may be entitled under applicable law, Denali’s certificate
      of incorporation or bylaws or otherwise. 

     

    14. Certain
      Definitions.
      

      

    (a) “Expenses”
shall
      include all direct and indirect costs (including, without limitation, attorneys’
fees, retainers, court costs, transcripts, fees of experts, witness fees, travel
      expenses, duplicating costs, printing and binding costs, telephone charges,
      postage, delivery service fees, all other disbursements or out-of-pocket
      expenses) actually and reasonably incurred in connection with either the
      investigation, defense, settlement or appeal of a Proceeding or establishing
      or
      enforcing a right to indemnification under this agreement, applicable law or
      otherwise; provided, however, that “Expenses” shall not include any Liabilities.

      

    (b) “Independent
      Legal Counsel”
shall
      mean a law firm or a member of a firm selected by the Companies and approved
      by
      Indemnitee (which approval shall not be unreasonably withheld). Notwithstanding
      the foregoing, the term “Independent Legal 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 Companies or
      Indemnitee in an action to determine Indemnitee’ right to indemnification under
      this agreement. 

     

    (c) “Liabilities”
shall
      mean liabilities of any type whatsoever including, but not limited to, any
      judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid
      in settlement (including all interest assessments and other charges paid or
      payable in connection with or in respect of such judgments, fines, penalties
      or
      amounts paid in settlement) of any Proceeding. 

     

    (d) “Proceeding”
shall
      mean any threatened, pending or completed action, claim, suit, arbitration,
      alternate dispute resolution mechanism, investigation, administrative hearing
      or
      any other proceeding whether civil, criminal, administrative or investigative,
      that is associated with Indemnitee’ actions as officers and/or directors of
      Denali relating to the approval of or consummation of the Merger, absent bad
      faith, gross negligence, intentional misconduct, including any action brought
      by
      or in the right of Denali or Velcera. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    15. Binding
      Effect; Duration and Scope of Agreement.
      This
      agreement shall be binding upon and inure to the benefit of and be enforceable
      by the parties hereto and their respective successors and assigns (including
      any
      direct or indirect successor by purchase, merger, consolidation or otherwise
      to
      all or substantially all of the business or assets of the Companies), spouses,
      heirs and personal and legal representatives. This agreement shall continue
      in
      effect for two (2) years subsequent to the closing of the Merger, regardless
      of
      whether Indemnitee continues to serve as director of Denali. 

     

    16. Severability.
      If any
      provision or provisions of this agreement (or any portion thereof) shall be
      held
      to be invalid, illegal or unenforceable for any reason whatsoever: 

     

    (a) the
      validity, legality and enforceability of the remaining provisions of this
      agreement shall not in any way be affected or impaired thereby; and

     

    (b) to
      the
      fullest extent legally possible, the provisions of this agreement shall be
      construed so as to give effect to the intent of any provision held invalid,
      illegal or unenforceable. 

     

    17. Governing
      Law.
      This
      agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the State of Delaware, as applied to contracts between Delaware
      residents entered into and to be performed entirely within the State of
      Delaware, without regard to conflict of laws rules. 

     

    18. Consent
      to Jurisdiction.
      The
      Companies and Indemnitee each irrevocably consent to the jurisdiction of the
      courts of the State of Delaware for all purposes in connection with any action
      or proceeding that arises out of or relates to this agreement and agree that
      any
      action instituted under this agreement shall be brought only in the state courts
      of the State of Delaware. 

     

    19. Entire
      Agreement.
      This
      agreement represents the entire agreement between the parties hereto, and there
      are no other agreements, contracts or understandings between the parties hereto
      with respect to the subject matter of this agreement.

    

    20. Counterparts.
      This
      agreement may be executed in one or more counterparts, each of which shall
      for
      all purposes be deemed to be an original but all of which together shall
      constitute one and the same agreement. 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    The
      parties are signing this indemnity agreement as of the date first set forth
      above.

     

    
      	 	 	 	 
	 	 	 	
              DENALI
                SCIENCES, INC.

            
	 	 	 	 
	 	 	 	/s/
              J. Jay
              Lobell
	
            	 	 	
              

              Name:
                J. Jay Lobell

            
	
            	 	 	Title: President

    

    
       

      
        	 	 	 	 
	 	 	 	
                
                  VELCERA
                    PHARMACEUTICALS, INC.

                

              
	 	 	 	 
	 	 	 	/s/
                Dennis F.
                Steadman
	
              	 	 	
                

                
                  Name:
                    Dennis F. Steadman

                

              
	
              	 	 	
                Title: President

              

         

        
          	 	 	 	 
	 	 	 	/s/
                  Timothy M.
                  Hofer
	
                	 	 	
                  

                  
                    
                      Timothy
                        M.
                        Hofer

                    

                  

                

        

      

    

     

    
      
         

      

      
        7

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