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6.16 INDEMNIFICATION AGREEMENT - X. XXXXXXX EXHIBIT 6.16
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2ND day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and Xxxxxx Xxxxxxx ("DIRECTOR").
WITNESSETH THAT:
WHEREAS, Director, a member of the Board of Directors of the
Corporation, performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation and Section 4 of the
Bylaws of the Corporation authorize and permit contracts between Corporation and
the members of its Board of Directors providing for indemnification, among other
things, of such directors; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors by such D &
O Insurance and by statutory and bylaw indemnification provisions; and
WHEREAS, in order to induce Director to serve or continue to
serve as the case may be, as a member of the Board of Directors of Corporation,
Corporation has determined that it is in its best interests to enter into this
contract with Director;
NOW, THEREFORE, in consideration of Director's continued service
as a director after the date hereof, the parties hereto agree as follows:
1. INDEMNITY OF DIRECTOR. Corporation hereby agrees to hold
harmless and indemnify Director to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Director:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Director is,
was or at any time becomes a party, or is reasonably thought to be threatened to
be
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made a party, by reason of the fact that Director is, was or at any time
becomes a director, officer, employee or agent of Corporation, or is or was
serving or at any time serves at the request of Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Director by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be indemnified
exceeds the sum of (A) such losses for which the Director is indemnified
pursuant to Section 1 hereof and (B) any settlement pursuant to any D & O
Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Director if it shall
be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Director for an accounting of profits made from the purchase or sale by
Director of securities of Corporation pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Director's acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law;
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Director unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a Court
having jurisdiction in the matter shall determine that such indemnification is
not lawful;
(b) In addition to those limitations set forth above in paragraph
(a) of this Section 3, no indemnity pursuant to Section 2 hereof in an action by
or in the right of Corporation shall be paid by Corporation for any of the
following:
(i) on account of acts or omissions that Director believed or
believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Director;
(ii) with respect to any transaction from which Director
derived an improper personal benefit;
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(iii) on account of acts or omissions that show a reckless
disregard for Director's duties to the corporation or its shareholders in
circumstances in which Director was aware, or should have been aware, in the
ordinary course of performing a Director's duties, of a risk of serious injury
to Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Director's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the California
Corporations Code, entitled "Contracts in Which Director Has Material Financial
Interest;"
(vi) to the extent prohibited by Section 316 of the California
Corporations Code, entitled "Corporate Actions Subjecting Directors To Joint And
Several Liability" (generally for prohibited distributions, loans and
guarantees);
(vii) in respect of any claim, issue or matter as to which
Director shall have been adjudged to be liable to Corporation in the performance
of Director's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Director is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing of a
pending action without court approval; and
(ix) of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Director for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Director (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Director on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Director on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Director on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
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5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof; but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Director otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel satisfactory to
Director. After notice from Corporation to Director of its election so as to
assume the defense thereof, Corporation will not be liable to Director under
this Agreement for any legal or other expenses subsequently incurred by Director
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ its counsel in such action, suit or proceeding but the fees and expenses
of such counsel incurred after notice from Corporation of its assumption of the
defense thereof shall be at the expense of Director unless (i) the employment of
counsel by Director has been authorized by Corporation, (ii) Director shall have
reasonably concluded that there may be a conflict of interest between
Corporation and Director in the conduct of the defense of such action or (iii)
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which case the fees and expenses of counsel shall be at
the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Director, or as to which Director
shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Director under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation nor Director will
unreasonably withhold its consent to any proposed settlement.
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7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Director employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Director,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to become or continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon Director
and upon Corporation, its successors and assigns, and shall inure to the benefit
of Director, his heirs, personal representatives and assigns and to the benefit
of Corporation, its successors and assigns.
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY:
XXXXX XXXXXX, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ADDRESS: 0000 XXXXXX XXXXXX
XXXX XXXX, XXXXXXXXXX 00000
BY:
XXXXXX XXXXXXX
ADDRESS: 0000 XXXXXX XXXXX
XXX XXXX, XX 00000
December 6, 1999
