EXHIBIT 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made effective as of the
____ day of _________, 2002 by and between XXXXXXX CARDIOLOGY SYSTEMS, INC., a
California corporation (the "Company"), and ______________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the increases in the
cost of such insurance and the general reductions in the coverage of such
insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if Indemnitee
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 action, suit or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action, suit or
proceeding, had reasonable cause to believe that Indemnitee's conduct was
unlawful.
(b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement (if such settlement is approved in advance by the Company,
such approval not to be unreasonably withheld or delayed), in each case to the
extent actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such action or suit if Indemnitee 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 its shareholders, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company in the
performance of Indemnitee's duty to the Company and its shareholders unless and
only to the extent that the court in which such action or suit is or was pending
shall determine upon application that, in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1 or the
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
(d) Other Payment of Expenses. Other than for indemnification of
expenses by the Company pursuant to Section 1(c) or otherwise ordered by a court
of law, Indemnitee shall be indemnified by the Company against expenses
(including attorneys' fees) actually and reasonably incurred by Indemnitee only
if authorized in a specific case upon a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct set forth in Section 1(a) or 1(b), as applicable,
which determination shall be made by one of the following methods (as chosen by
the Company): (i) by a majority vote of the directors who are not parties to the
applicable action, suit or proceeding ("Disinterested Directors"), even though
less than a quorum may have been present, or by a committee of Disinterested
Directors appointed thereby, (ii) by Independent Legal Counsel (as such term is
defined below), reasonably acceptable to Indemnitee and the Company, in a
written opinion applying the applicable standard of conduct set forth in Section
1(a) or 1(b), as applicable, or (iii) by the shareholders of the Company
applying the applicable standard of conduct set forth in Section 1(a) or 1(b),
as applicable; provided, that, in any case, all
requirements of applicable law have been met. For purposes of this Section 1(d),
"Independent Legal Counsel" shall mean a law firm, or a member of a law firm,
that is experienced in matters of corporate law and neither presently is, nor in
the past five years has been, retained to represent: (A) the Company or
Indemnitee in any matter (other than jointly with respect to the rights of
Indemnitee under this Agreement or other indemnities, under similar indemnity
agreements); or (B) any other party to the action, suit or proceeding giving
rise to a claim for indemnification hereunder; provided, however, Independent
Legal Counsel shall not include any firm or 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.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all expenses
(including attorneys' fees), incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or criminal action,
suit or proceeding referenced in Section l(a) or (b) hereof (including amounts
actually paid in settlement of any such action, suit or proceeding). Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it shall ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid promptly by the Company to Indemnitee following delivery
of a written request therefor by Indemnitee to the Company which request
provides documentation supporting such advances.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to the right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). Omission of such Notice does not relieve the Company of its
obligation (unless it results in damages to the Company). Notice shall be deemed
received three business days after the date postmarked if sent by domestic
certified or registered mail, properly addressed; otherwise notice shall be
deemed received when such notice shall actually be received by the Company. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
(c) Procedure.
(i) Any indemnification and advances provided for in Sections
1 and/or 2, shall be made as soon as practicable, but in no event no later than
forty-five (45) days after receipt of the written request of Indemnitee. If a
claim under this Agreement, under any statute, or under any provision of the
Company's Articles of Incorporation or Bylaws, as amended, providing for
indemnification, is not paid in full by the Company within forty-five (45) days
after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid
amount of the claim and, subject to Section 12 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses (including attorneys' fees)
incurred in connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify Indemnitee
for the amount claimed, but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of expenses
(including attorneys' fees) pursuant to Subsection 2(a) unless and until such
defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, Independent Legal Counsel, or its
shareholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, Independent Legal Counsel, or its shareholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(ii) During the interval between the Company's receipt of such
a request under paragraph (b) of this Section 2, and the later to occur of (x)
payment in full to Indemnitee of the indemnification or advances required by
Sections 1 and 2 or (y) a determination (if required) pursuant to this Agreement
and applicable law that Indemnitee is not entitled to indemnification hereunder,
the Company shall take all necessary steps (whether or not such steps require
expenditures to be made by the Company at that time), to stay (pending a final
determination of Indemnitee's entitlement to indemnification and, if Indemnitee
is so entitled, the payment thereof) the execution, enforcement or collection of
any judgments, penalties, fines or any other amounts for which Indemnitee may be
liable (and as to which Indemnitee has requested indemnification hereunder) in
order to avoid Indemnitee being or becoming in default with respect to any such
amounts (such necessary steps to include, but not be limited to, the procurement
of a surety bond to achieve such stay or a loan to Indemnitee of amounts for
which Indemnitee may be liable and as to which a stay of execution as aforesaid
cannot be obtained), promptly after receipt of Indemnitee's written request
therefor together with a written undertaking by Indemnitee to repay promptly
following receipt of a statement therefor from the Company, amounts (if any)
expended by the Company for such purpose, if it is ultimately determined (if
such determination is required) that Indemnitee is not entitled to be
indemnified against such judgments, penalties, fines or other amounts.
(d) Notice to Insurers. If, at the time of the receipt of a notice
of a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such action, suit or proceeding to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of
the Indemnitee, all amounts payable as a result of such action, suit or
proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated under Section 2(a) hereof to pay the expenses (including attorneys'
fees) of any action, suit or proceeding against Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee
of written notice of its election so to do. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the same
action, suit or proceeding, provided that (i) Indemnitee shall have the right to
employ counsel in any such action suit or proceeding at Indemnitee's expense;
and (ii) if (A) the employment of counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such action, suit or proceeding, then
the fees and expenses of Indemnitee's counsel shall be at the expense of the
Company. The Company shall not be entitled to assume the defense of any claim,
action, suit or proceeding brought by or on behalf of the Company against
Indemnitee or as to which the Indemnitee shall have made the conclusion provided
for in (ii) (B) above.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's Bylaws, or by statute. In the event of any change
in any applicable law, statute or rule which narrows the right of a California
corporation to indemnify a member of its board of directors or an officer, such
changes, to the extent not otherwise required by such law, statute or rule to be
applied to this Agreement shall have no effect on this Agreement or the parties'
rights and obligations hereunder. In the event of any change, after the date of
this Agreement, in any applicable law, statute, or rule which expands the right
of a California corporation to indemnify a member of its board of directors or
an officer, it is the intent of the parties hereto that Indemnitee shall,
without the necessity of amending this Agreement, be entitled to the full
benefit of such expanded indemnification rights. Indemnitee's rights under this
Agreement are contractual rights which may not be diminished, modified or
restricted by any subsequent change in the Company's Articles of Incorporation,
Bylaws or corporate policies, as amended.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its Bylaws, any agreement, any
vote of shareholders or disinterested Directors, the Corporation Law of the
State of California, or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though Indemnitee may have ceased to serve in such capacity at the time of any
action, suit or other covered proceeding.
4. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorneys' fees), judgments, fines or
penalties actually or reasonably incurred in the investigation, defense, appeal
or settlement of any civil, criminal, administrative or investigative action,
suit or proceeding, but not, however, for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or penalties to which Indemnitee
is entitled.
5. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. For example, the Company and Indemnitee acknowledge that the
Securities and Exchange Commission (the "SEC") has taken the position that
indemnification is not permissible for liabilities arising under certain federal
securities laws, and federal legislation prohibits indemnification for certain
ERISA violations. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
6. Officer and Director Liability Insurance. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee, as long as he or she is
serving as director or officer of the Company, shall be named as an insured in
such a manner as to provide Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company's directors, if Indemnitee
is a director; or of the Company's officers, if Indemnitee is not a director of
the Company but is an officer; or of the Company's key employees, if Indemnitee
is not an officer or director but is a key employee. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.
7. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement
shall not constitute a breach of this Agreement. The provisions of this
Agreement shall be severable as provided in this Section 7. If this Agreement or
any portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the
full extent permitted by any applicable portion of this Agreement that shall not
have been invalidated, and the balance of this Agreement not so invalidated
shall be enforceable in accordance with its terms.
8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to actions, suits, proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to actions, suits or proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 317 of the California Corporation Law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors has approved the initiation or bringing
of such suit.
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any action, suit or proceeding
instituted by Indemnitee to enforce or interpret this Agreement, if a court of
competent jurisdiction determines that each of the material assertions made by
the Indemnitee in such action, suit or proceeding was not made in good faith or
was frivolous.
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company.
(d) 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 Securities Exchange Act of 1934,
as amended, or any similar successor statute.
9. No Employment Rights. Nothing contained in this Agreement is
intended to create in Indemnitee any right to continued employment.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company"
shall include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that if Indemnitee is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
15. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of California,
without giving effect to principles of conflict of law.
16. Modification. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. All prior
negotiations, agreements and understandings between the parties with respect
thereto are superseded hereby. This Agreement may not be modified or amended
except by an instrument in writing signed by or on behalf of the parties hereto.
17. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
to effectively bring suit to enforce such rights.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
XXXXXXX CARDIOLOGY SYSTEMS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address: 0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
AGREED TO AND ACCEPTED BY
INDEMNITEE:
-------------------------------
(signature)
-------------------------------
-------------------------------
(address)
