Document:

exv10w28

 

Exhibit 10.28

INDEMNIFICATION AGREEMENT

     INDEMNIFICATION AGREEMENT (this “Agreement”) dated as of September 7, 2006 by and between
Sucampo Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and Sue Molina
(“Indemnitee”):

     WHEREAS, competent persons are reluctant to serve a corporation as a director or in another
capacity unless they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of corporations;

     WHEREAS, the Board of Directors of the Company has determined that the ability to attract and
retain such persons is in the best interests of the Company’s stockholders and that the Company
should act to assure such persons that there will be increased certainty of such protection in the
future; and

     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they will not be so
indemnified; and

     WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the Company on the condition that Indemnitee be so indemnified;

     NOW, THEREFORE, in consideration of the premises, the mutual agreements herein set forth below
and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

     1. Definitions. For purposes of this Agreement the following terms shall have the
meanings set forth below:

     (a) “Board” shall mean the Board of Directors of the Company.

     (b) “Change of Control” shall mean any of the following events:

     (i) Unless approved by the affirmative vote of at least two-thirds of those
members of the Board who are in office immediately prior to the event(s) and who are
not employees of the Company:

     (A) the merger or consolidation of the Company with, or the sale of all
or substantially all of the assets of the Company to, any person or entity
or group of associated persons or entities; or

     (B) the acquisition of direct or indirect beneficial ownership in the
aggregate of securities of the Company representing twenty percent (20%) or
more of the total combined voting power of the Company’s then

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issued and outstanding securities by any person or entity, or group of
associated persons or entities acting in concert, not affiliated (within the
meaning of the Securities Act of 1933) with the Company as of the date of
this Agreement; or

     (C) approval by the stockholders of the Company of any plan or proposal
for the liquidation or dissolution of the Company; or

     (ii) A change in the composition of the Board at any time during any
consecutive 24-month period such that the “Continuing Directors” cease for any
reason to constitute at least a seventy percent (70%) majority of the Board. For
purposes of this clause (ii), “Continuing Directors” means those members of the
Board who either:

     (A) were members of the Board at the beginning of such consecutive
24-month period; or

     (B) were elected by, or on the nomination or recommendation of, at
least a two-thirds majority (consisting of at least five directors) of the
then-existing Board.

     (c) “Corporate Status” describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise which such
person is or was serving at the express written request of the Company.

     (d) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (e) “Enterprise” shall mean the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was
serving at the express written request of the Company as a director, officer, employee,
agent or fiduciary.

     (f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a
witness in a Proceeding.

     (g) “Good Faith” shall mean Indemnitee having acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal Proceeding, having had no reasonable cause to believe
Indemnitee’s conduct was unlawful.

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     (h) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any matter material
to either such party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel”
shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

     (i) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or any other actual, threatened or
completed proceeding whether civil, criminal, administrative or investigative, other than
one initiated by Indemnitee. For purposes of the foregoing sentence, a “Proceeding” shall
not be deemed to have been initiated by Indemnitee where Indemnitee seeks pursuant to
Section 9 of this Agreement to enforce Indemnitee’s rights under this Agreement.

     2. Term of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) 10 years after the date that Indemnitee has ceased to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which Indemnitee served at the express
written request of the Company or (b) the final termination of all pending Proceedings in respect
of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Section 9 of this Agreement relating thereto.
In addition, no legal action shall be brought and no cause of action shall be asserted by or in
the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of five (5) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within such five (5) year
period; PROVIDED, HOWEVER, that if any shorter period of limitations is otherwise applicable to any
such cause of action, such shorter period shall govern.

     3. Services by Indemnitee, Notice of Proceedings.

     (a) Services. Indemnitee agrees to serve as a director of the Company.
Indemnitee may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation of law).

     (b) Notice of Proceeding. Indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter that may be subject to
indemnification or advancement of Expenses covered hereunder.

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     4. Indemnification.

     (a) In General. In connection with any Proceeding, the Company shall indemnify
and advance Expenses to Indemnitee as provided in this Agreement and to the fullest extent
permitted by applicable law in effect on the date hereof and to such greater extent as
applicable law may thereafter from time to time permit.

     (b) Proceedings Other Than Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this Section 4(b)
if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made,
a party to any Proceeding, other than a Proceeding by or in the right of the Company.
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts
paid in settlements actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee
acted in Good Faith including without limitation, any and all losses, claims, damages,
expenses and liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any action,
suit, proceeding or any claim asserted) under the Securities Act of 1933, the Securities
Exchange Act of 1934, as amended (the “Exchange Act of 1934”) or other federal or state
statutory law or regulation, at common law or otherwise or which relate directly or
indirectly to the registration, purchase, sale or ownership of any securities of the Company
or to any fiduciary obligation owed with respect thereto or as a direct or indirect result
of any Proceeding or any claim, issue or matter therein made by any stockholder of the
Company against Indemnitee and arising out of or related to any round of financing of the
Company (including but not limited to Proceedings or any claims, issues or matters therein
regarding non-participation, or non-pro rata participation, in such round by such
stockholder), or made by a third party against Indemnitee based on any misstatement or
omission of a material fact by the Company in violation of any duty of disclosure imposed on
the Company by federal or state securities or common laws.

     (c) Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 4(c) if, by reason of
Indemnitee’s Corporate Status, Indemnitee is or is threatened to be made a party to any
Proceeding brought by or in the right of the Company to procure a judgment in its favor.
Indemnitee shall be indemnified against Expenses, judgments, penalties and amounts paid in
settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding if Indemnitee acted in Good Faith. Notwithstanding the
foregoing, no such indemnification shall be made in respect of any claim, issue or matter in
such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company
if applicable law prohibits such indemnification; provided, however, that, if applicable law
so permits, indemnification shall nevertheless be made by the Company in such event if and
only to the extent that the Court of Chancery of the State of Delaware, or the court in
which such Proceeding shall have been brought or is pending, shall determine.

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     (d) Indemnification 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 Indemnitee’s Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent
permitted by law against all Expenses, judgments, penalties, fines and amounts paid in
settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all claims, issues
or matters in such Proceeding, the Company shall indemnify Indemnitee to the maximum extent
permitted by law, against all Expenses, judgments, penalties, fines and amounts paid in
settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with each successfully resolved claim, issue or matter. For purposes of this
Section 4(d) 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, so long as there has been no finding (either
adjudicated or pursuant to Section 6) that Indemnitee did not act in Good Faith.

     (e) Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s
Corporate Status, a witness in any Proceeding, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection therewith.

     (f) Assumption of Defense and Settlement. Notwithstanding any other provision
of this Agreement, with respect to any such Proceeding as to which the Indemnitee gives
notice to the Company of the commencement thereof:

     (1) the Company will be entitled to participate therein at its own expense;

     (2) the Company, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel satisfactory to the
Indemnitee. If the Company assumes the defense of the Indemnitee, it shall notify
the Indemnitee, and after the Indemnitee receives such notice, the Company shall not
be liable to the Indemnitee under this Agreement for any Expenses incurred by the
Indemnitee after the date such notice was received. The Indemnitee shall be
entitled to employ Indemnitee’s own counsel at Indemnitee’s own expense.
Nevertheless, the Company shall pay for Indemnitee’s own counsel if (1) the Company
agrees to do the same, (2) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee regarding the
defense of such action, or (3) the Company shall not in fact have employed counsel
to assume the defense of the Proceeding. The Company shall not be entitled to
assume the defense of any Proceeding brought by or on behalf of the Company or as to
which the Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee regarding the defense of such
Proceeding; and

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     (3) the Company shall not be liable to the Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding unless the Company consents to such
settlement. The Company shall not settle any Proceeding in any manner that would
impose any penalty or limitation on the Indemnitee without the Indemnitee’s written
consent. Neither the Company nor the Indemnitee will unreasonably withhold their
consent to any proposed settlement.

     (g) Contribution.

     (1) Notwithstanding any other provision of this Agreement, if the
indemnification provided for in this Section 4 for any reason is held by a court of
competent jurisdiction to be unavailable to Indemnitee in respect of any losses,
claims, damages, expenses or liabilities referred to therein, then the Company, in
lieu of indemnifying Indemnitee thereunder, shall contribute to the amount paid or
payable by Indemnitee as a result of such losses, claims, damages, expenses or
liabilities

     (A) in such proportion as is appropriate to reflect the relative
benefits received by the Company and Indemnitee; or

     (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (A) above but also the relative
fault of the Company and 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.

     (2) In connection with the registration of the Company’s securities, the
relative benefits received by the Company and 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 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 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 Indemnitee and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The
Company and Indemnitee agree that it would not be just and equitable if contribution
pursuant to this Section 4(g) 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.

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     (3) In connection with the registration of the Company’s securities, in no
event shall Indemnitee be required to contribute any amount under this Section 4(g)
in excess of the lesser of:

     (A) 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
Indemnitee; or

     (B) the proceeds received by Indemnitee from its sale of securities
under such registration statement.

     (4) Persons found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act of 1933) shall only be entitled to contribution
from any person who was found guilty of such fraudulent misrepresentation.

     5. Exceptions

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

     (a) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the
payment of profits arising from the purchase and sale by Indemnitee of securities in
violation of Section 16(b) of the Exchange Act of 1934 or any similar successor statute; or

     (b) Unlawful Indemnification. To indemnify Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such indemnification is not
lawful.

     6. Advancement of Expenses. Notwithstanding any provision to the contrary in Section
7, the Company shall advance all reasonable Expenses which, by reason of Indemnitee’s Corporate
Status, were incurred by or on behalf of Indemnitee in connection with any Proceeding, within 20
days after the receipt by the Company of a statement or statements from Indemnitee requesting such
advance or advances, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified against such
Expenses. Any advance and undertakings to repay pursuant to this Section 6 shall be unsecured and
interest free.

     7. Procedures for Determination of Entitlement to Indemnification.

     (a) Initial Request. To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is entitled to

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indemnification. The Secretary of the Company shall promptly advise the Board in
writing that Indemnitee has requested indemnification.

     (b) Method of Determination. A determination (if required by applicable law)
with respect to Indemnitee’s entitlement to indemnification shall be made as follows:

     (1) if a Change in Control has occurred, unless Indemnitee shall request in
writing that such determination be made in accordance with clause (2) of this
Section 7(b), the determination shall be made by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee;

     (2) if a Change of Control has not occurred, the determination shall be made by
the Board by a majority vote of Disinterested Directors, even though less than a
quorum. In the event that there are no Disinterested Directors or if such
Disinterested Directors so direct, the determination shall be made by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee.

     (c) Selection, Payment, Discharge, of Independent Counsel. In the event the
determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 7(b) of this Agreement, the Independent Counsel shall be selected, paid
and discharged in the following manner:

     (1) If a Change of Control has not occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising Indemnitee of the identity of the Independent Counsel so selected.

     (2) If a Change of Control has occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be made
by the Board, in which event clause (1) of this Section 7(c) shall apply), and
Indemnitee shall give written notice to the Company advising it of the identity of
the Independent Counsel so selected.

     (3) Following the initial selection described in clauses (1) and (2) of this
Section 7(c), Indemnitee or the Company, as the case may be, may, within seven days
after such written notice of selection has been given, deliver to the other party a
written objection to such selection. 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 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 such
written objection is made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such objection is
without merit.

     (4) Either the Company or Indemnitee may petition any court of competent
jurisdiction if the parties have been unable to agree on the selection of

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Independent Counsel within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 7(a) of this Agreement. Such
petition may request a determination whether an objection to the party’s selection
is without merit and/or seek the appointment as Independent Counsel of a person
selected by the Court or by such other person as the Court shall designate. A
person so appointed shall act as Independent Counsel under Section 7(b) of this
Agreement.

     (5) The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with acting
pursuant to this Agreement, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 7(c), regardless of the manner
in which such Independent Counsel was selected or appointed.

     (6) Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 9(c) of this Agreement, Independent Counsel shall be discharged
and relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).

     (d) Cooperation. Indemnitee shall cooperate with the person, persons or entity
making the determination with respect to Indemnitee’s entitlement to indemnification under
this Agreement, including providing to such person, persons or entity upon reasonable
advance request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including attorneys’ fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and
agrees to hold Indemnitee harmless therefrom.

     (e) Payment. If it is determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within 10 days after such
determination.

     8. Presumptions and Effect of Certain Proceedings.

     (a) Burden of Proof. In making a determination with respect to entitlement to
Indemnification hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 7(a), and the Company
shall have the burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.

     (b) Effect of Other Proceedings. The termination of any Proceeding or of any
claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly

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provided in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in Good Faith.

     (c) Reliance as Safe Harbor. For purposes of any determination of Good Faith,
Indemnitee shall be deemed to have acted in Good Faith if Indemnitee’s action is based on
the records or books of account of the Enterprise, including financial statements, or on
information supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public accountant or by
an appraiser or other expert selected with reasonable care by the Enterprise. The
provisions of this Section 8(c) shall not be deemed to be exclusive or to limit in any way
the other circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct set forth in this Agreement.

     (d) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee
for purposes of determining the right to indemnification under this Agreement.

     9. Remedies of Indemnitee.

     (a) Application. This Section 9 shall apply in the event of a Dispute. For
purposes of this article, “Dispute” shall mean any of the following events:

     (1) a determination is made pursuant to Section 7 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement;

     (2) advancement of Expenses is not timely made pursuant to Section 6 of this
Agreement;

     (3) if the determination of entitlement to be made pursuant to Section 7(b) of
this Agreement is to be made by the Board and the Board has not made such
determination within 60 days after receipt by the Company of the request for
indemnification;

     (4) if the determination of entitlement to be made pursuant to Section 7(b) of
this Agreement is to be made by Independent Counsel and Independent Counsel has not
made such determination within 90 days after receipt by the Company of the request
for indemnification;

     (5) payment of indemnification is not made pursuant to Section 4(e) of this
Agreement within 10 days after receipt by the Company of a written request therefor;
or

     (6) payment of indemnification is not made within 10 days after a determination
has been made that Indemnitee is entitled to indemnification or such determination
is deemed to have been made pursuant to Section 7 of this Agreement.

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     (b) Adjudication. In the event of a Dispute, Indemnitee shall be entitled to
an adjudication in an appropriate court in the State of Delaware, or in any other court of
competent jurisdiction, of Indemnitee’s entitlement to such indemnification or advancement
of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication
or an award in arbitration within 180 days following the date on which Indemnitee first has
the right to commence such proceeding pursuant to this Section 9(b). The Company shall not
oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

     (c) De Novo Review. In the event that a determination shall have been made
pursuant to Section 7 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee
shall not be prejudiced by reason of that adverse determination. In any such proceeding or
arbitration, the Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.

     (d) Company Bound. If a determination shall have been made or deemed to have
been made pursuant to Section 7 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any judicial proceeding
or arbitration absent (i) a misstatement by Indemnitee of a material fact, or an omission of
a material fact necessary to make Indemnitee’s statement not materially misleading in
connection with the request for indemnification or (ii) a prohibition of such
indemnification under applicable law.

     (e) Procedures Valid. The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is bound by all
of the provisions of this Agreement.

     (f) Expenses of Adjudication. In the event that Indemnitee, pursuant to this
Section 9, seeks a judicial adjudication of or an award in arbitration to enforce
Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of Expenses in this
Agreement) actually and reasonably incurred by Indemnitee in such adjudication or
arbitration, but only if Indemnitee prevails therein. If it shall be determined in such
adjudication or arbitration that Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in
connection with such adjudication or arbitration shall be appropriately prorated.

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     10. Non-exclusivity, Insurance, Subrogation.

     (a) Non-Exclusivity. The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable law, the Certificate of
Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration, rescission or replacement of this
Agreement or any provision hereof shall be effective as to Indemnitee with respect to any
action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such
amendment, alteration, rescission or replacement.

     (b) Insurance. The Company may maintain an insurance policy or policies
against liability arising out of this Agreement or otherwise.

     (c) Subrogation. In the event of any payment under this Agreement, the Company
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 take all action necessary to secure
such rights, including execution of such documents as are necessary to enable the Company to
bring suit to enforce such rights.

     (d) No Duplicative Payment. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

     11. Miscellaneous Provisions.

     (a) Entire Agreement. This Agreement contains the entire understanding between
the parties hereto with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations, written or oral, relating to the subject
matter hereof.

     (b) Counterparts. This Agreement may be executed in separate counterparts,
each of which will be an original and all of which taken together shall constitute one and
the same agreement, and any party hereto may execute this Agreement by signing any such
counterpart.

     (c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable under any
applicable law or rule, the validity, legality and enforceability of the other provision of
this Agreement will not be affected or impaired thereby.

     (d) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, personal representatives and
successors and assigns.

Sucampo Pharmaceuticals, Inc.

Director Indemnification Letter

12

 

     (e) Modification, Amendment, Waiver or Termination. No provision of this
Agreement may be modified, amended, waived or terminated except by an instrument in writing
signed by the parties to this Agreement. No course of dealing between the parties will
modify, amend, waive or terminate any provision of this Agreement or any rights or
obligations of any party under or by reason of this Agreement.

     (f) Notices. All notices, consents, requests, instructions, approvals or other
communications provided for herein shall be in writing and delivered by personal delivery,
overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at
the address set forth herein. All such communications shall be effective when received.

If to the Company:

Sachiko Kuno, PhD

President and Chief Executive Officer

c/o Sucampo Pharmaceuticals, Inc.

4733 Bethesda Avenue

Suite 450

Bethesda, MD 20814

If to the Indemnitee:

                                                            

                                                            

                                                            

     Any party may change the address set forth above by notice to each other party given as
provided herein.

     (g) Headings. The headings and any table of contents contained in this
Agreement are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

     (h) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION,
VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.

     (i) Third-Party Benefit. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights, remedies, obligations or liabilities of
any nature whatsoever.

     (j) Jurisdiction and Venue. THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL
COURT OR STATE COURT SITTING IN DELAWARE,

Sucampo Pharmaceuticals, Inc.

Director Indemnification Letter

13

 

AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY
ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF ANY PARTY COMMENCES ANY ACTION
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS AGREEMENT IN ANOTHER JURISDICTION OR VENUE, ANY OTHER PARTY TO THIS
AGREEMENT SHALL HAVE THE OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED VENUE OR
JURISDICTION OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED, TO HAVE SUCH CASE DISMISSED
WITHOUT PREJUDICE.

     (k) Remedies. The parties agree that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may, in its
discretion, apply to any court of law or equity of competent jurisdiction for specific
performance and injunctive relief in order to enforce or prevent any violations this
Agreement, and any party against whom such proceeding is brought hereby waives the claim or
defense that such party has an adequate remedy at law and agrees not to raise the defense
that the other party has an adequate remedy at law.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

Sucampo Pharmaceuticals, Inc.

Director Indemnification Letter

14

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth
in the first paragraph.

	 	 	 	 	 
	 	SUCAMPO PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Sachiko Kuno
 	 
	 	
Name:  Sachiko Kuno 	 
	 	
Its: President & CEO 	 
	 

	 	 	 	 	 
	 	INSERT NAME OF DIRECTOR

 	 
	 	/s/ V. Sue Molina
 	 
	 	Indemnitee 	 
	 	 	 
	 

Sucampo Pharmaceuticals, Inc.

Director Indemnification Letter

15exv10w1

 

Exhibit 10.1

AGREEMENT

          This Agreement is entered into by and between SafeNet, Inc. (“SafeNet”) and Anthony Caputo
(“Mr. Caputo”), the Chairman and Chief Executive Officer of SafeNet.

          In consideration of the covenants undertaken and contained herein, the adequacy of which is
herein acknowledged, the parties agree as follows:

          1. In accordance with Section 8 of the Employment Agreement between Mr. Caputo and SafeNet,
dated December 12, 2001, as amended by agreement dated as of September 1, 2004 (“Employment
Agreement”), Mr. Caputo hereby gives notice of the resignation of his employment under the
Employment Agreement, with such resignation to become effective on December 31, 2006 (the
“Separation Date”). In addition, Mr. Caputo hereby resigns effective October 17, 2006 from any and
all positions he holds with SafeNet, including his position as Chief Executive Officer and a member
of the Board of Directors of SafeNet and his positions as an officer, employee or Board member of
any SafeNet subsidiary.

          2. Mr. Caputo will remain as an employee of SafeNet for the purpose of working with SafeNet on
the management transition and other significant issues during the period referred to in Section 1.
In consideration for the services rendered under the Employment Agreement and this Agreement,
through the Separation Date SafeNet will pay to Mr. Caputo his base salary (including the ten
percent increase in such salary due starting as of July 1, 2006), certain existing benefits
provided to executive officers of the Company (i.e., family medical, dental, disability and
life insurance, participation in pension and retirement plans, and use of his automobile, cell
phone, Blackberry, office space and secretarial support) and accrued vacation, and shall continue
to fund the variable life insurance policy provided for in Section 5 of the Employment Agreement
through the Separation Date. Except as otherwise provided herein or in the Employment Agreement,
as of the Separation Date Mr. Caputo will be eligible to receive the benefits provided to former
employees of SafeNet under SafeNet’s employee benefit plans, in accordance with the terms and
conditions of each such plan.

          3. Both Mr. Caputo and SafeNet reserve all rights under the Employment Agreement. For the
avoidance of doubt, Mr. Caputo retains the right to contest any position taken or determination
made by the Personnel Committee, the Special Committee, or the Board pursuant to the Employment
Agreement or this Agreement, including but not limited to Paragraph 5, 6, and 10 of this Agreement.

          4. SafeNet will not consider Mr. Caputo’s resignation to be a resignation within the meaning
of Section 9(b) of the Employment Agreement or, except as expressly provided herein, for any other
purpose relating to the Employment Agreement.

 

 

          5. The Personnel Committee of the SafeNet Board of Directors will advise Mr. Caputo by March
29, 2007 (“Decision Date”) whether it has determined that
Mr. Caputo should be treated as having been terminated for Cause under the Employment
Agreement, or whether the Committee agrees with Mr. Caputo’s position that he has resigned his
employment for a Good Reason. None of the periods of time set forth in the Employment Agreement
within which events must occur or actions must be taken shall begin to run until the Personnel
Committee determines whether Mr. Caputo should be considered to have been terminated for Cause, or
whether Mr. Caputo has resigned his employment for a Good Reason (provided that any required
six-month waiting period under Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), shall begin to run as of the Separation Date). SafeNet and Mr. Caputo agree that no
statutes of limitations on any claims Mr. Caputo or SafeNet may have under the Employment Agreement
shall begin to run until the Decision Date or such earlier date as the Personnel Committee
determines whether Mr. Caputo should be considered to have been terminated for Cause or whether Mr.
Caputo has resigned his employment for a Good Reason. Subject to the foregoing sentences of this
Section 5, if the Personnel Committee determines that Mr. Caputo should be considered to have been
terminated for Cause or whether Mr. Caputo has resigned his employment for a Good Reason, that
determination will have the same effect under the Employment Agreement as if the termination or
resignation was effective as of the date of this Agreement. If the Personnel Committee fails to
make a decision by the Decision Date, Mr. Caputo will be deemed to have resigned his employment for
Good Reason as of the date of this Agreement with entitlement to all the rights the benefits
provided for in the Employment Agreement. Notwithstanding anything in this paragraph, none of the
payments or benefits conferred to Mr. Caputo under Paragraphs 2, 7 or 9 of this Agreement may be
revoked by the Company as a result of the decision of the Personnel Committee described herein.

          6. Any payments or benefits to which Mr. Caputo may be due under Sections 5 and 9 (other than
the health benefits described in paragraph 7 of this Agreement) of the Employment Agreement shall
not become due until ten days after the Personnel Committee determines whether Mr. Caputo should be
considered to have been terminated for Cause or whether Mr. Caputo resigned his employment for a
Good Reason, and shall be made at that time in accordance with the terms of the Employment
Agreement; provided, however, that the foregoing shall not cause Mr. Caputo to forfeit or waive any
claim for benefits he may have under a plan, policy or arrangement that is an “employee benefit
plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended. If the Personnel Committee fails to make a decision by the Decision Date, Mr. Caputo will
receive the payments and benefits he is entitled to by April 8, 2007. The Company agrees to
provide Mr. Caputo with written notice within three business days of the release of its restated
financial statements for fiscal years 2000 through 2005 and first quarter 2006 specifying which
options, if any, he received where the Company has changed the measurement date such that there is
an accounting charge. With regard to any such options for which the Company has changed the
measurement date such that there is an accounting charge, Mr. Caputo agrees that he will not
exercise such options for SafeNet stock until the Decision Date or such earlier date on which the
Personnel Committee reaches its decision under Paragraph 5 of this Agreement. With regard to any
options for which the Company has not changed the measurement date such that there is an accounting
charge, Mr. Caputo may exercise his

 

 

rights under those options and may participate in a Change of Control or other sale of
business transaction in the same manner as other option holders. SafeNet further agrees that the
foregoing restrictions on exercise of Mr. Caputo’s stock options shall not apply to those options
granted on January 1, 2000 and shall not restrict in any way Mr. Caputo’s ability to purchase,
sell, tender or exchange his SafeNet stock. In addition to any amount that may become payable to
Mr. Caputo under Sections 5 and 9 of his Employment Agreement, as soon as practicable following the
Separation Date (subject to any required six-month waiting period under Section 409A of the Code),
the Company shall make a lump sum payment to Mr. Caputo equal to $27,000.00.

          7. Mr. Caputo and his family shall continue to receive the medical benefits SafeNet currently
provides him until December 31, 2006 at no cost to them (other than normal co-payment amounts).
Thereafter, following Mr. Caputo’s termination of employment on December 31, 2006, Mr. Caputo and
his family shall be entitled to receive COBRA benefits for the maximum continuation period (as
applicable to Mr. Caputo (for a period of eighteen months) and each covered member of his family
(for a period of thirty-three months)) permitted under COBRA under the medical plans maintained by
the Company. With regard to the Company’s fully-insured plans (Execucare and dental), all premiums
for such COBRA coverage shall be paid by the Company. With regard to the Company’s self-insured
plan (Blue Cross/Blue Shield), all premiums for such COBRA coverage shall be paid by Mr. Caputo.

          8. Mr. Caputo and SafeNet waive their right to notice of any termination for Cause under
Section 8(a) of the Employment Agreement.

          9. Mr. Caputo’s resignation under this Agreement will not affect any advancement of fees or
indemnification to which he otherwise would be entitled under applicable state law, under the
Articles of Incorporation and Bylaws of SafeNet, or under the Employment Agreement. SafeNet also
agrees that all such rights to indemnification shall apply to any claims relating to or arising
from his employment from the date of this Agreement through the Separation Date.

          10. Mr. Caputo and the Special Committee of the SafeNet Board of Directors and the Personnel
Committee will attempt to reach agreement on any amount to be paid or repaid to SafeNet by Mr.
Caputo, and any amount to be paid by SafeNet to Mr. Caputo, in connection with the Employment
Agreement and with respect to any actual or potential claims arising out of the process of granting
stock options at SafeNet (and the accounting for and disclosure of such stock option grants) or any
other claims asserted against Mr. Caputo in stockholder derivative actions, and any actual or
potential claims Mr. Caputo may assert against SafeNet. Nothing in this Agreement shall preclude
Mr. Caputo from asserting any claim for benefits or compensation under his Employment Agreement,
including any claim for incentive compensation or stock options under Section 5 of his Employment
Agreement. To the extent that any agreement between the parties under this paragraph contains a
release of claims asserted against Mr. Caputo in pending stockholder derivative actions, the
parties agree that such a release shall be subject to approval by the appropriate courts in which
any stockholder derivative actions are then pending.

 

 

          11. SafeNet and Mr. Caputo agree that Mr. Caputo shall be provided a reasonable opportunity to
review and comment on SafeNet’s proposed public statement relating to this Agreement and his
separation from SafeNet, and that SafeNet will consider, in good faith, any comments made by Mr.
Caputo; provided that SafeNet shall not be obligated to make any changes to such public statement
based on any comments received from Mr. Caputo.

          12. Nothing contained in this Agreement shall be deemed as an admission by any party.

          13. This Agreement shall not be deemed to constitute a waiver of any rights, claims or
defenses of any of the parties to this Agreement or the Employment Agreement, all of which are
expressly preserved. Preserved rights and claims include, but are not limited to, SafeNet’s
ability to assert termination for Cause and Mr. Caputo’s ability to assert termination without
Cause or resignation for Good Reason; provided, however, that Mr. Caputo agrees that any assertion
of termination without Cause or resignation for Good Reason shall be effective as of the date of
this Agreement, and that such assertion shall not be made before the Decision Date. This Agreement
does not constitute a release of any claims that either party may have against the other.

          14. This Agreement can be modified only in writing signed by the parties. The Agreement shall
constitute the entire understanding between the parties concerning the subject matter of this
Agreement and supersedes and replaces all prior negotiations, proposed agreements, and agreements,
written or oral, relating to this subject.

          15. Both parties agree to cooperate with the other in taking the actions required under the
terms of this Agreement, including without limitation those described in paragraphs 1 and 10
hereof.

          16. Mr. Caputo and SafeNet shall cooperate in good faith to amend this Agreement and the
Employment Agreement, in each case, in the least restrictive manner necessary in order for the
payments and benefits to which Mr. Caputo is entitled to comply with Section 409A the Code. Any
such amendments shall be designed so as to preserve the economic benefits intended to be provided
to Mr. Caputo.

          17. Both parties have cooperated in the drafting and preparation of this Agreement. Hence, in
any construction to be made of this Agreement, the same shall not be construed against any party on
the basis that the party was the drafter.

          18. This Agreement may be executed in one or more counterparts, each of which shall constitute
an original, and all of which shall constitute one instrument.

          19. In entering this Agreement, the parties represent that they have relied upon the advice of
their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have
been completely read and explained to them by their attorneys, and that those terms are fully
understood and voluntarily accepted by them.

 

 

          20. To the fullest extent allowed by law, any controversy or claim arising out of or relating
to this Agreement shall be settled by binding and non-appealable arbitration conducted in
Wilmington, Delaware, or such other place as the parties hereto agree, by a three-member
arbitration tribunal acting in accordance with the Commercial Arbitration rules of the American
Arbitration Association. To the extent anything in this Agreement conflicts with any arbitration
procedures required by applicable law, the arbitration procedures required by applicable law shall
govern. The proceedings before the tribunal shall be maintained in the strictest confidence by the
parties and the tribunal, subject only to legal requirements of disclosure. The arbitration
tribunal shall issue a written award that sets forth the essential findings and conclusions on
which the award is based. The tribunal shall have the authority to award any relief authorized by
law in connection with the asserted claims or disputes. The arbitration award shall be enforceable
before any court of competent jurisdiction, and shall be subject to correction, confirmation or
vacatur only on the grounds provided by applicable law, including the Federal Arbitration Act.
Nothing in this paragraph shall be construed to apply to or affect pending stockholder derivative
actions brought on behalf of the Company.

          21. SafeNet and Mr. Caputo will share equally the arbitrator’s fees and any other expense of
conducting the arbitration, except that if the arbitrators determine that Mr. Caputo had a “good
faith basis to bring the arbitration,” then SafeNet will pay the first $25,000 of tribunal’s fees
and any other expense of conducting the arbitration. Each party will pay its own attorney’s fees
and costs. Any final decision of the arbitrator so chosen may be enforced by a court of competent
jurisdiction.

          Each of the undersigned have read the foregoing Agreement, and accepts and agrees to the
provisions it contains and hereby executes it voluntarily with full understanding of its
consequences.

SafeNet, Inc.

	 	 	 	 	 
	By:
	 	/s/  Walter Straub	 	 
	Title:

	 	 

Personnel Committee Chairman
	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/  Andrew E. Clark	 	 
	Title:

	 	 

Special Committee Chairman
	 	 
	 
	 	 	 	 
	Dated:
	 	October 17, 2006	 	 
	 
	 	 	 	 
	Anthony Caputo	 	 
	 
	 	 	 	 
	By:
	 	/s/  Anthony Caputo	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Dated:
	 	October 17, 2006

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