INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (“Agreement”) is made
as of this 16th day of July, 2010, by and between Apollo Medical Holdings, Inc.,
a Delaware corporation (the “Company”), and Xxxxxx
Xxxxxxxx (“Indemnitee”), with
reference to the following facts:
A. Indemnitee
is a director of the Company.
B. The
Company recognizes that the vagaries of public policy and the interpretation of
ambiguous statutes, regulations and court opinions are too uncertain to provide
the Company’s officers and directors with adequate or reliable advance knowledge
or guidance with respect to the legal risks and potential liabilities to which
they may become personally exposed as a result of performing their duties in
good faith as an Agent (as defined below) for the Company Group (as defined
below).
C. The
Company recognizes that the cost to a director or officer of defending against
lawsuits resulting from the performance of his or her duties in good faith for
the Company Group, whether or not meritorious, is typically beyond the financial
resources of most officers and directors of the Company.
D. The
Company recognizes that the legal risks and potential liabilities, and the very
threat thereof, associated with lawsuits filed against the officers and
directors of the Company Group, and the resultant substantial time, expense,
harassment and anxiety spent and endured in defending against such lawsuits,
bears no reasonable or logical relationship to the amount of compensation
received by such officers and directors, and thus poses a significant deterrent
to and results in increased reluctance on the part of experienced and capable
individuals to serve as an Agent of the Company Group.
E. In
order to induce and encourage highly experienced and capable persons such as
Indemnitee to serve as an Agent of the Company Group, secure in the knowledge
that certain expenses, costs and liabilities incurred by them in their defense
of such litigation will be borne by the Company and that they will receive the
maximum protection against such risks and liabilities as may be afforded by law,
the Board (as defined below) has determined that entering into this Agreement
with Indemnitee is not only reasonable and prudent but necessary to promote and
ensure the best interests of the Company and the Company’s
shareholders.
F. The
Company and Indemnitee desire that the indemnification rights provided by this
Agreement shall be supplemental to, and shall not supersede or replace, any
indemnification rights which may be provided by other sources, including without
limitation any indemnification which may be provided by the Company pursuant to
its bylaws, by contract or by applicable law.
NOW,
THEREFORE, with reference to the foregoing facts, the Company and Indemnitee
hereby agree as follows:
1. Agreement to
Serve. Indemnitee agrees to serve and/or continue to serve as
a director and/or officer of one or more members of the Company Group in the
same capacity or capacities in which Indemnitee is serving on the date hereof
for at least 10 days from the date hereof; provided, however, that nothing
contained in this Agreement is intended to or shall create any obligation of any
member of the Company Group to continue to retain Indemnitee as an Agent or to
maintain Indemnitee as a director during such period.
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2. Definitions.
The
following terms shall have the meanings set forth below:
“Action” shall mean
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
“Agent” shall mean,
with respect to Indemnitee, Indemnitee in his or her capacity as an officer,
director, employee or agent of the Company Group and in his or her capacity as
an officer, director, employee or agent of any other Entity for which he or she
is serving in such capacity or capacities as the request of the
Company. For purposes of this Agreement, if Indemnitee provides
service as an officer, director, employee or agent of any Entity controlled by
the Company or any employee benefit plan of the Company, then Indemnitee shall
be deemed to serve at the request of the Company.
“Board” shall mean the
Board of Directors of the Company.
“Company Group” shall
mean the Company, each subsidiary and parent of the Company, and any successor,
resulting or surviving corporation of the Company or any subsidiary or parent of
such successor, resulting or surviving corporation.
For
purposes of this Agreement, references to the “Company Group” shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its Agents, so that if Indemnitee is or was an Agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as an 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.
“Entity” shall mean
any corporation, limited liability company, partnership, joint venture, trust or
other enterprise, and employee benefit plan.
“Expenses” shall
include costs and expenses, including without limitation attorneys’
fees.
“Fines” shall include,
in addition to fines, any excise taxes assessed on Indemnitee with respect to an
employee benefit plan.
For
purposes of this Agreement, 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 “in the best interests of the Company” as referred to in this
Agreement.
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3. Indemnification.
3.1 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 Action
(other than an Action by or in the right of the Company) by reason of the fact
that Indemnitee is or was an Agent against Expenses, judgments, Fines,
settlements and other amounts actually and reasonably incurred by Indemnitee in
connection with such Action if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the Company and
its shareholders and, with respect to any criminal Action, had no reasonable
cause to believe Indemnitee’s conduct was unlawful. The termination
of any Action 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
the best interest of the Company, or with respect to any criminal Action, had
reasonable cause to believe that Indemnitee’s conduct was unlawful.
3.2 Proceedings By or in the
Right of the Company. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
Action by or in the right of the Company to procure a judgment in its favor by
reason of the fact that Indemnitee is or was an Agent against Expenses actually
and reasonably incurred by Indemnitee in defense or settlement of the Action if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the best interests of the Company and its shareholders.
3.3 Mandatory Payment of
Expenses. To the extent that Indemnitee has been successful on
the merits or otherwise in defense of any Action referred to in Section 3.1
or 3.2 or the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against Expenses actually and reasonably incurred by Indemnitee in
connection therewith.
3.4 Approval for
Settlements. The Company shall not be obligated to indemnify
Indemnitee for any settlements entered into by Indemnitee with respect to any
Action unless the Company approves such settlement or the Company unreasonably
withholds such approval following not less than 10 days prior written notice of
the proposed settlement.
4. Expenses; Indemnification
Procedure.
4.1 Advancement of
Expenses. The Company shall advance all Expenses actually and
reasonably incurred by Indemnitee in connection with the investigation, defense,
or appeal of any Action referenced in Section 3
hereof. 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.
4.2 Notice to Company by
Indemnitee. Indemnitee shall, as a condition precedent to
Indemnitee’s right to be indemnified under this Agreement, give the Company
notice in writing as soon as practicable of any claim made against Indemnitee
for which such 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 executive offices of the
Company (unless Indemnitee is the Chief Executive Officer, in which
the notice shall be addressed to the Board of Directors and to the next most
senior officer of 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.
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4.3 Procedure. The
Company agrees to provide any indemnification and advances required under this
Agreement no later than 30 days after receipt of the written request of
Indemnitee. If a claim for indemnification or advance under this
Agreement is not paid in full by the Company within 30 days after a written
request for payment therefor 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. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in connection with any Action in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it permissible under
the applicable law for the Company to indemnify Indemnitee, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 4.1 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 intention of the
parties that if the Company contests Indemnitee’s right to indemnification under
this Agreement or applicable law, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the failure of the
Company (including its officers, Board, any committee or subgroup of its Board,
independent legal counsel or its shareholders) to have made a determination that
indemnification of Indemnitee is or is not proper in the circumstances because
Indemnitee has or has not met the applicable standard of conduct required by
this Agreement or by applicable law, nor an actual determination by the Company
(including its officers, Board, any committee or subgroup of its Board,
independent legal counsel or its shareholders) that Indemnitee has or has not
met such applicable standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of conduct.
4.4 Notice to
Insurers. If, at the time of the receipt of a notice of a
claim pursuant to Section 4 hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such 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 proceeding
in accordance with the terms of such policies.
4.5 Selection of
Counsel. If the Company shall be obligated under Section 3 or
4 hereof to indemnify Indemnitee or advance Expenses to Indemnitee in connection
with any Action, the Company shall be entitled to assume the defense of such
Action, 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, provided that (a) Indemnitee shall have the
right to employ separate counsel in any such Action at Indemnitee’s expense; and
(b) if (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, (ii) 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 (iii) the Company shall not, in fact,
have employed counsel to assume the defense of such Action, then the fees and
expenses of Indemnitee’s counsel shall be at the expense of the
Company.
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4.6 Effect of Change in
Law. Notwithstanding any other provision of this Agreement, in
the event of any change in any applicable law, statute or rule which narrows the
right of the Company to indemnify Indemnitee, such change, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties’ rights and obligations
hereunder.
4.7 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 Certificate of
Incorporation, its Bylaws, any other agreement, any vote of shareholders or
disinterested directors, applicable law, 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 from any action taken or not taken
while serving in an indemnified capacity even though he may have ceased to serve
in such capacity at the time of the Action.
5. 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, judgments, Fines, settlements and other amounts actually or reasonably
incurred by Indemnitee in the investigation, defense, appeal or settlement of
any Action, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,
settlements, Fines and other amounts to which Indemnitee is
entitled.
6. Mutual Acknowledgement re Submission
of Claims to Court. Both the Company and Indemnitee
acknowledge that in certain instances, Federal or state law, regulation or
applicable public policy may require the Company to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company’s right under law or public policy to indemnify Indemnitee. For example,
in connection with any public offering of the Company’s securities, the Company
will have to make such undertaking to the Securities and Exchange
Commission. Indemnitee acknowledges and agrees that the Company will
not be in breach of this Agreement for any such submission.
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 law, regulation or court
order, to perform its obligations under 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 entire 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:
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8.1 Claims Initiated by
Indemnitee. To indemnify or advance Expenses to Indemnitee
with respect to Actions initiated or brought voluntarily by Indemnitee and not
by way of defense unless the Company has approved the initiation or bringing of
such Action in writing; or
8.2 Lack of Good
Faith. To indemnify Indemnitee for any Expenses incurred by
Indemnitee with respect to any Action initiated by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
each of the material assertions made by Indemnitee in such Action was not made
in good faith or was frivolous; or
8.3 No Duplication of
Payments. To make any payment in connection with any claim
made against Indemnitee to the extent Indemnitee has otherwise received payment
(under any insurance policy, the Certificate of Incorporation or Bylaws of the
Company, contract or otherwise) of the amounts otherwise indemnifiable
hereunder. If the Company makes any indemnification payment to
Indemnitee in connection with any claim made against Indemnitee and Indemnitee
has already received or thereafter receives payments in connection with the same
claim, then Indemnitee shall reimburse the Company in an amount equal to the
lesser of (a) the amount of the payment otherwise received by Indemnitee
and (b) the full amount of the indemnification payment made by the
Company.
8.4 Violation of
Law. To indemnify or advance Expenses if such indemnification
would be a violation of applicable law or regulation.
8.5 Breach of Employment
Agreement. To indemnify or advance Expenses in connection with
any claim by any member of the Company Group for any breach by Indemnitee of any
employment agreement.
8.6
Insured
Claims. 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 or other policy of insurance maintained by the
Company.
8.7 Unlawful
Claims. In any manner which is contrary to public policy or
which a court of competent jurisdiction has finally determined to be
unlawful.
8.8 Failure to Settle
Action. For liabilities in excess of the total amount at which
settlement reasonably could have been made, or for any cost and/or expenses
incurred by Indemnitee following the time such settlement reasonably could have
been effected, if Indemnitee shall have unreasonably delayed, refused or failed
to enter into a settlement of any Action (or investigation or appeal thereof)
recommended in good faith, in writing, by the Company and which does not require
the Indemnitee to admit liability or agree to any injunctive
relief.
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9.
Directors and Officers
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 directors and officers 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
such policies of liability insurance, Indemnitee 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 an director of
the Company but is an officer. 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.
10. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
11. 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.
12. Notices. All
notices, requests, demands and other communications (collectively, “Notices”) given
pursuant to this Agreement shall be in writing, and shall be delivered by
personal service, courier, facsimile transmission or by United States first
class, registered or certified mail, postage prepaid, addressed to the party at
the address set forth on the signature page of this Agreement. Any
Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails. Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this
Section.
13. Attorneys’ Fees. If
any Action is brought to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to recover as an element of its costs,
and not its damages, reasonable attorneys’ fees to be fixed by the
court. The prevailing party is the party who is entitled to recover
the costs of its Action, whether or not such Action results in a final
judgment. A party not entitled to recover its costs of suit may not
recover attorneys’ fees. No sum for attorneys’ fees shall be counted
in calculating the amount of a judgment for purposes of determining whether a
party is entitled to recover its costs or attorneys’ fees.
The
following alternative should be considered
If
Indemnitee institutes an Action 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 all 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 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
all of Indemnitee’s material defenses to such Action were made in bad faith or
were frivolous.
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14. Consent to
Jurisdiction. Each of the Company and Indemnitee irrevocably
consents to the jurisdiction of the court of the State of California for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agrees that any action instituted under this
Agreement shall be brought only in the state courts of the State of California,
or in Federal courts located in such State.
15. Governing Law. This
Agreement shall be governed by and its provisions construed in accordance with
the laws of the State of Delaware.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
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/S/ Xxxxxx Xxxxxxxxxx,
M.D.
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Its: Chief
Executive Officer
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Agreed
to and accepted:
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INDEMNITEE:
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/S/ Xxxxxx
Xxxxxxxx
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