1
6.17 INDEMNIFICATION AGREEMENT - R. UMAR EXHIBIT 6.17
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2nd day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and ROCKY UMAR ("OFFICER").
RECITALS
WHEREAS, Officer, an executive officer of the Corporation,
performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation of the Corporation
authorize and permit contracts between Corporation and the members of its Board
of Directors and Officers providing for indemnification, among other things, of
such directors and officers; 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 and officers
by such D & O Insurance and by statutory and bylaw indemnification provisions;
and
WHEREAS, in order to induce Officer to serve or continue to serve
as the case may be, as an executive officer of Corporation, Corporation has
determined that it is in its best interests to enter into this contract with
Officer;
NOW, THEREFORE, in consideration of Officer's continued service
as an executive officer after the date hereof, the parties hereto agree as
follows:
1. INDEMNITY OF OFFICER. Corporation hereby agrees to hold
harmless and indemnify Officer 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 Officer:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Officer 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 Officer is, was
or at any time becomes a party, or is reasonably thought to be threatened to be
made a party, by reason of the fact that Officer is, was or at any time becomes
a director,
2
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
Officer 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 Officer is
indemnified pursuant to Section I hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Officer 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 Officer for an accounting of profits made from the purchase or sale by
Officer 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 Officer'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 Officer 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 Officer 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 Officer;
(ii) with respect to any transaction from which Officer
derived an improper personal benefit;
3
(iii) on account of acts or omissions that show a reckless
disregard for Officer's duties to the corporation or its shareholders in
circumstances in which Officer was aware, or should have been aware, in the
ordinary course of performing a Officer'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 Officer'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
Officer shall have been adjudged to be liable to Corporation in the performance
of Officer'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, Officer 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 Officer 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 Officer (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 Officer in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Officer 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 Officer 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 Officer 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.
4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations
of Corporation contained herein shall continue during the period Officer 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 Officer 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 Officer
was an officer of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt
by Officer of notice of the commencement of any action, suit or proceeding,
Officer 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 Officer otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Officer 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 Officer. After notice from Corporation to Officer of its
election so as to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer 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 Officer unless (i)
the employment of counsel by Officer has been authorized by Corporation, (ii)
Officer shall have reasonably concluded that there may be a conflict of interest
between Corporation and Officer 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 Officer, or as to which Officer shall
have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Officer 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 Officer
without Officer's written consent. Neither Corporation nor Officer will
unreasonably withhold its consent to any proposed settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Officer employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Officer,
prior to any final disposition of
5
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 (1 0) days after receiving copies of invoices
presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer 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 Officer 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 Officer to become or continue as an officer of
Corporation, and acknowledges that Officer is relying upon this Agreement in
continuing in such capacity.
(b) In the event Officer 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 Officer for all of Officer'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
Officer and upon Corporation, its successors and assigns, and shall inure to the
benefit of Officer, his heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
6
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
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
ADDRESS: 0000 XXXXXX XXXXXX
XXXX XXXX, XX 00000
BY:
ROCKY UMAR
ADDRESS: 0000 XXXXXX XXXXXX
XXXX XXXX, XX 00000
