INDEMNIFICATION AGREEMENT
Exhibit 10.1
This Indemnification Agreement (“Agreement”) is made as of _________ __, 2010 by and between
MedCath Corporation, a Delaware corporation (the “Company”), and ______________ (“Indemnitee”).
This Agreement supersedes and replaces any and all previous Agreements between the Company and
Indemnitee covering the subject matter of this Agreement.
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve corporations as
[directors] [officers] or in other capacities 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 the corporation;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis,
at its sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and other business
enterprises, the Company believes that, given current market conditions and trends, such insurance
may be available to it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only against the Company or business
enterprise itself. The Certificate of Incorporation of the Company (the (the “Certificate of
Incorporation”) and the Bylaws of the Company (the “Bylaws”) require indemnification of the
officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant
to the General Corporation Law of the State of Delaware (the “DGCL”). The Certificate of
Incorporation, Bylaws and the DGCL expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be entered into between the
Company and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company and its stockholders and that the
Company should act to assure such persons that there will be increased certainty of such protection
in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, 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;
WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of
Incorporation and Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the Certificate of
Incorporation, Bylaws and insurance as adequate in the present circumstances, and may not be
willing to serve as an officer or director without adequate protection, and the Company desires
Indemnitee to serve in such capacity. 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 he be so
indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Services to the Company. Indemnitee agrees to serve [as a [director]
[officer] [employee] [agent] of the Company] [, at the request of the Company, as a [director]
[officer] [employee] [agent] [fiduciary] of [another corporation, partnership, joint venture, trust
or other enterprise]. 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), in
which event the Company shall have no obligation under this Agreement to continue Indemnitee in
such position. This Agreement shall not be deemed an employment contract between the Company (or
any of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges
that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if
any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment contract between Indemnitee
and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance
policies duly adopted by the Board, or, with respect to service as a director or officer of the
Company, by the Certificate of Incorporation, the Bylaws, and the DGCL. The foregoing
notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve [as an
[officer] [director] [agent] [employee] of the Company] [, at the request of the Company, as a
[director] [officer] [employee] [agent] [fiduciary] of [another corporation, partnership, joint
venture, trust or other enterprise], as provided in Section 16 hereof.
Section 2. Definitions. As used in this Agreement:
(a) References to “agent” shall mean any person who is or was a director, officer, or employee
of the Company or a subsidiary of the Company or other person authorized by the Company to act for
the Company, to include such person serving in such capacity as a director, officer, employee,
fiduciary or other official of another corporation, partnership, limited
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liability company, joint venture, trust or other enterprise at the request of, for the
convenience of, or to represent the interests of the Company or a subsidiary of the Company.
(b) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date
of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the combined voting power of the Company’s then
outstanding securities unless the change in relative Beneficial Ownership of the Company’s
securities by any Person results solely from a reduction in the aggregate number of outstanding
shares of securities entitled to vote generally in the election of directors;
ii. Change in Board of Directors. During any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a transaction described in
Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to constitute at least a
majority of the members of the Board;
iii. Corporate Transactions. The effective date of a merger or consolidation of the Company
with any other entity, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 51% of the combined voting power of the voting securities of the
surviving entity outstanding immediately after such merger or consolidation and with the power to
elect at least a majority of the board of directors or other governing body of such surviving
entity;
iv. Other Events. There occurs any other event of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar
item on any similar schedule or form) promulgated under the Exchange Act (as defined below),
whether or not the Company is then subject to such reporting requirement.
For purposes of this Section 2(b), the following terms shall have the following meanings:
(A) “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended from time to time.
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(B) “Person” shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that Person
shall exclude (i) the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
and (iii) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.
(C) “Beneficial Owner” shall have the meaning given to such
term in Rule 13d-3 under the Exchange Act; provided, however, that
Beneficial Owner shall exclude any Person otherwise becoming a
Beneficial Owner by reason of the stockholders of the Company
approving a merger of the Company with another entity.
(c) “Corporate Status” describes the status of a person who is or was a director, trustee,
partner, managing member, officer, employee, agent or fiduciary of the Company or of any other
corporation, limited liability company, partnership or joint venture, trust or other enterprise
which such person is or was serving at the request of the Company.
(d) “Disinterested Director” shall mean 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, limited liability company,
partnership, joint venture, trust or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, trustee, partner, managing member, employee, agent
or fiduciary.
(f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts and other professionals, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees,
fax transmission charges, secretarial services, any federal, state, local or foreign taxes imposed
on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement,
ERISA excise taxes and penalties, and all other disbursements, obligations or expenses of the types
customarily incurred in connection with, or as a result of, prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a deponent or witness in, or otherwise
participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection
with any appeal resulting from any Proceeding, including without limitation the premium, security
for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent, (ii) expenses incurred in connection with recovery under any directors’ and officers’
liability insurance policies maintained by the Company, regardless of whether the Indemnitee is
ultimately determined to be entitled to such indemnification, advancement or Expenses or insurance
recovery, as the case may be, and (iii) for purposes of Section 14(d) only, Expenses incurred by or
on behalf of Indemnitee in connection with the
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interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by
litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses
for which Indemnitee has made written demand to the Company in accordance with this Agreement, all
Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being
reasonable shall be presumed conclusively to be reasonable. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(g) “Independent Counsel” shall mean 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 (other than with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements), 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. The
Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
(h) The term “Proceeding” shall include any threatened, pending or completed action, suit,
claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened or completed
proceeding, whether brought in the right of the Company or otherwise and whether of a civil,
criminal, administrative, regulatory, legislative, or investigative (formal or informal) nature,
including any appeal therefrom, in which Indemnitee was, is or will be involved as a party,
potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a
director or officer of the Company, by reason of any action taken by him (or a failure to take
action by him) or of any action (or failure to act) on his part while acting pursuant to his
Corporate Status, including any action (or failure to act) which occurred prior to the adoption of
this Agreement, in each case whether or not serving in such capacity at the time any liability or
Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be
provided under this Agreement. If the Indemnitee believes in good faith that a given situation may
lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding
under this paragraph.
(i) Reference to “other enterprise” shall include employee benefit plans; references to
“fines” shall include any excise tax assessed with respect to any employee benefit plan; 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 a person who acted in good faith and in a manner he
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reasonably believed to be in the best interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests
of the Company” as referred to in this Agreement.
Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened
to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee
shall be indemnified to the fullest extent permitted by applicable law against all Expenses,
judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect of such Expenses,
judgments, liabilities, fines, penalties and amounts paid in settlement) actually and reasonably
incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or
matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had
no reasonable cause to believe that his conduct was unlawful. The parties hereto intend that this
Agreement shall provide to the fullest extent permitted by law for indemnification in excess of
that expressly permitted by statute, including, without limitation, any indemnification provided by
the Certificate of Incorporation, the Bylaws, vote of its stockholders or disinterested directors
or applicable law.
Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or
is threatened to be made, a party to or a participant in any Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company. If applicable law so provides, no
indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or
matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the
Company, unless and only to the extent that the Delaware Court of Chancery or any court in which
the Proceeding was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification.
Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by
applicable law and to the extent that Indemnitee is a party to (or a participant in) and is
successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his 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
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Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with or related to each successfully resolved claim, issue or
matter to the fullest extent permitted by law. For purposes of this Section 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.
Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the fullest extent permitted by applicable law and to the extent
that Indemnitee is, by reason of his Corporate Status, a witness or otherwise asked to participate
in any aspect of a Proceeding to which Indemnitee is not a party, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of Expenses, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled.
Section 8. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify
Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or
threatened to be made a party to or a participant in any Proceeding (including a Proceeding by or
in the right of the Company to procure a judgment in its favor) against all Expenses, judgments,
fines and amounts paid in settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in
settlement) actually and reasonably incurred by or on behalf of Indemnitee in connection with the
Proceeding.
(b) For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted
by applicable law” shall include, but not be limited to:
i. to the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL, and
ii. to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.
Section 9. Exclusions. Notwithstanding any other provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnification payment in
connection with any claim made against Indemnitee:
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(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance
policy or other indemnity provision, except with respect to any excess beyond the amount paid under
any insurance policy or other indemnity provision; or
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as
defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, or (ii)
any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or
equity-based compensation or of any profits realized by the Indemnitee from the sale of securities
of the Company, as required in each case under the Exchange Act (including any such reimbursements
that arise from an accounting restatement of the Company pursuant to Section 304 of the
Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”), or the payment to the Company of profits
arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the
Xxxxxxxx-Xxxxx Act); or
(c) except as provided in Section 14(d) of this Agreement, in connection with any Proceeding
(or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of
any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees
or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any
Proceeding) prior to its initiation, (ii) such payment arises in connection with any mandatory
counterclaim or cross-claim or affirmative defense brought or raised by Indemnitee in any
Proceeding (or any part of any Proceeding), or (iii) the Company provides the indemnification, in
its sole discretion, pursuant to the powers vested in the Company under applicable law.
Section 10. Advances of Expenses. Notwithstanding any provision of this Agreement to
the contrary (other than Section 14(d)), the Company shall advance, to the extent not prohibited by
law, the Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding (or any
part of any Proceeding) not initiated by Indemnitee, and such advancement shall be made within
thirty (30) days after the receipt by the Company of a statement or statements requesting such
advances from time to time (which shall include invoices received by the Indemnitee in connection
with such Expenses but, in the case of invoices in connection with legal services, any references
to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege
accorded by applicable law shall not be so included), whether prior to or after final disposition
of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without
regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate
entitlement to indemnification under the other provisions of this Agreement. In accordance with
Section 14(d), advances shall include any and all reasonable Expenses incurred pursuing an action
to enforce this right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. The Indemnitee shall qualify for
advances upon the execution and delivery to the Company of this Agreement, which shall constitute
an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without
interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company. No other form of
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undertaking shall be required other than the execution of this Agreement. This Section 10
shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.
Section 11. Procedure for Notification and Defense of Claim.
(a) Indemnitee shall notify the Company in writing of any matter with respect to which
Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as
reasonably practicable following the receipt by Indemnitee of written notice thereof or
Indemnitee’s becoming aware thereof. The written notification to the Company shall include a
description of the nature of the Proceeding and the facts underlying the Proceeding, in each case
to the extent known to Indemnitee. 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 indemnification following the final
disposition of such Proceeding. The failure by Indemnitee to notify the Company hereunder will not
relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than
under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by
Indemnitee of any rights under this Agreement, except to the extent (solely with respect to the
indemnity hereunder) that such failure or delay materially prejudices the Company. The Secretary
of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board
in writing that Indemnitee has requested indemnification.
(b) The Company will be entitled to participate in the Proceeding at its own expense.
(c) The Company shall not settle any Proceeding (in whole or in part) if such settlement would
impose any Expense, judgment, liability, fine, penalty or limitation on Indemnitee which Indemnitee
is not entitled to be indemnified hereunder without the Indemnitee’s prior written consent.
Section 12. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a
determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto
shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or
(ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested
Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested
Directors designated by a majority vote of the Disinterested Directors, even though less than a
quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested
Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which
shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the
Company; and, if it is so determined that Indemnitee is
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entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, 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 or on behalf of 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. The Company promptly will advise
Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to
indemnification, including a description of any reason or basis for which indemnification has been
denied.
(b) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as
provided in this Section 12(b). If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change in Control shall
have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall
request that such selection be made by the Board, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be,
may, within ten (10) days after such written notice of selection shall have been given, deliver to
the Company or to Indemnitee, as the case may be, a written objection to such selection;
provided, however, that 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 Section 2 of 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 so made and substantiated, the Independent
Counsel so selected may not serve as Independent Counsel unless and until such objection is
withdrawn or the Delaware Court has determined that such objection is without merit. If, within
twenty (20) days after the later of submission by Indemnitee of a written request for
indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, no
Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee
may petition the Delaware Court for resolution of any objection which shall have been made by the
Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by such court or by such other person as such court shall
designate, and the person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement
of any judicial proceeding or arbitration pursuant to Section 14(a) 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).
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(c) If the Company disputes a portion of the amounts for which indemnification is requested,
the undisputed portion shall be paid and only the disputed portion withheld pending resolution of
any such dispute.
Section 13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall, to the fullest extent not prohibited
by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and
the Company shall, to the fullest extent not prohibited by law, 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. Neither the failure of the Company (including by its
directors or Independent Counsel) to have made a determination prior to the commencement of any
action pursuant to this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company
(including by its directors or Independent Counsel) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has
not met the applicable standard of conduct.
(b) Subject to Section 14(e), if the person, persons or entity empowered or selected under
Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within sixty (60) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall, to the fullest
extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such
indemnification, 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; provided, however, that such 60-day period may be extended for a reasonable time,
not to exceed an additional thirty (30) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith requires such additional
time for the obtaining or evaluating of documentation and/or information relating thereto; and
provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the stockholders pursuant to
Section 12(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of
the request for such determination the Board has resolved to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held within seventy-five
(75) days after such receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within fifteen (15) days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.
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(c) 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 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 and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
(d) 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 directors or
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 the reasonable care by
the Enterprise. The provisions of this Section 13(d) 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. Whether or not the foregoing
provisions of this Section 13(d) are satisfied, it shall in any event be presumed that Indemnitee
has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company.
(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee,
partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this Agreement.
Section 14. Remedies of Indemnitee.
(a) Subject to Section 14(e), in the event that (i) a determination is made pursuant to
Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this
Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant
to Section 12(a) of this Agreement within ninety (90) days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6
or 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by
the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4
or 8 of this Agreement is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification, or (vi) the Company or any other person or entity takes
or threatens to take any action to declare this Agreement void or unenforceable, or institutes any
litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the
benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be
entitled to an adjudication by a court of his entitlement to such indemnification or advancement of
Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator
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pursuant to the Commercial Arbitration 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 14(a); provided, however, that the foregoing clause shall
not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of
this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or
award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 12(a) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 14 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 judicial proceeding or arbitration commenced
pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled
to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section 12(a) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 14, 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.
(d) The Company shall, to the fullest extent not prohibited by law, be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 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 the
provisions of this Agreement. It is the intent of the Company that, to the fullest extent
permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated
with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Indemnitee hereunder. The Company shall, to the fullest
extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor)
advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by or
on behalf of Indemnitee in connection with any action brought by Indemnitee for indemnification or
advancement of Expenses from the Company under this Agreement or under any directors’ and officers’
liability insurance policies maintained by the Company if, in the case of indemnification,
Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on
the underlying claims, then such indemnification shall be only to the extent Indemnitee is
successful on such underlying claims or otherwise as permitted by law, whichever is greater.
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(e) Notwithstanding anything in this Agreement to the contrary, no determination as to
entitlement of Indemnitee to indemnification under this Agreement shall be required to be made
prior to the final disposition of the Proceeding.
Section 15. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement (i) 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 and (ii) shall be interpreted
independently of, and without reference to, any other such rights to which Indemnitee may at any
time be entitled. No amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken
or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in Delaware law, whether by statute or judicial decision,
permits greater indemnification or advancement of Expenses than would be afforded currently under
the Certificate of Incorporation, the Bylaws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents of the Enterprise, Indemnitee
shall be covered by such policy or policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director, officer, employee or agent under such
policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms
hereof, the Company has director and officer liability insurance in effect, the Company shall give
prompt notice of such claim or of the commencement of a Proceeding, as the case may be, 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.
(c) 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) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder)
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hereunder if and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, trustee, partner, managing
member, fiduciary, employee or agent of any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by
any amount Indemnitee has actually received as indemnification or advancement of Expenses from such
other corporation, limited liability company, partnership, joint venture, trust or other
enterprise.
Section 16. Duration of Agreement. This Agreement shall continue until and terminate
upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve [as
a [director] [officer] [employee] [agent] of the Company] [,at the request of the Company, as a
[director] [officer] [employee] [agent] [fiduciary] of [another corporation, partnership, joint
venture, trust or other enterprise] or (b) one (1) year after the final termination of any
Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any proceeding (including any appeal) commenced by
Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and
advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding
upon and be enforceable by the parties hereto and their respective successors and assigns
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all
or substantially all of the business or assets of the Company), shall continue as to an Indemnitee
who has ceased to be a director, officer, employee or agent of the Company or of any other
Enterprise, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs,
devisees, executors and administrators and other legal representatives. The Company shall require
and shall cause any successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company to, by written
agreement, expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place.
Section 17. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including without limitation,
each portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by
law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform
to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
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Section 18. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director
or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof; provided, however,
that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the
Bylaws, any directors and officers insurance maintained by the Company and applicable law, and
shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder.
Section 19. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing waiver.
Section 20. Notice by Indemnitee. 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 which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.
Section 21. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by
hand and receipted for by the party to whom said notice or other communication shall have been
directed, (b) mailed by certified or registered mail with postage prepaid, on the third business
day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or
(d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has
been received:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as Indemnitee shall provide to the Company.
(b) If to the Company to
[notice information]
or to any other address as may have been furnished to Indemnitee by the Company.
-16-
Section 22. Contribution. To the fullest extent permissible under applicable law, if
the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by or on behalf of Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating
to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable
in light of all of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).
Section 23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules. Except with
respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the
Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or
federal court in the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not
otherwise subject to service of process in the State of Delaware, irrevocably RL&F Service Corp.,
One Xxxxxx Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in
the State of Delaware as such party’s agent for acceptance of legal process in connection with any
such action or proceeding against such party with the same legal force and validity as if served
upon such party personally within the State of Delaware, (iv) waive any objection to the laying of
venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead
or to make, any claim that any such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum.
Section 24. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 25. Miscellaneous. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate. The headings of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.
| MEDCATH CORPORATION | INDEMNITEE | |||||||||
By: |
||||||||||
| Name: | Name: | |||||||||
| Office: | Address: | |||||||||
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