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EXHIBIT 10.68
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is dated as of March 27, 1996,
between EDUCATIONAL MEDICAL, INC., a Delaware corporation ("Corporation"), and
_____________ ("Director").
RECITALS
A. Director is a member of Corporation's Board of Directors and Corporation
desires Director to continue in such capacity. Director is willing to continue
to serve on Corporation's Board of Directors if Director receives the
protections provided by this Agreement.
B. Corporation's Restated Certificate of Incorporation, as amended,
obligate it to indemnify its officers and directors to the maximum extent
authorized by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
C. Corporation has secured, at its expense, directors' and officers'
liability insurance ("D&O Insurance") protecting its directors in connection
with their performance of services for Corporation.
D. Corporation believes that (1) litigation against corporate directors,
regardless of whether meritorious, is expensive and time-consuming for the
director to defend; (2) there is a substantial risk of a large judgment or
settlement in litigation in which a corporate director was neither culpable nor
profited personally to the detriment of the corporation; (3) it is increasingly
difficult to attract and keep qualified directors because of such potential
liabilities; and (4) it is important for a director to have assurance that
indemnification will be available if the director acts in accordance with
reasonable business standards to the fullest extent permitted by applicable law,
it is in the best interests of Corporation and its shareholders for Corporation
to contractually obligate itself to indemnify its directors and to set forth the
details of the indemnification process.
E. Based upon the conclusions stated in Recital D above, to induce Director
to continue to serve on Corporation's Board of Directors and in consideration of
Director's continued service as a director, Corporation wishes to enter into
this Agreement with Director.
Therefore, Corporation and Director agree as follows:
1. AGREEMENT TO SERVE. Director will serve as a member of the Board of
Directors of Corporation so long as Director is duly elected and qualified to so
serve or until Director resigns or is removed from Corporation's Board of
Directors.
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2. INDEMNIFICATION.
(a) Corporation will indemnify Director to the fullest extent permitted
under the governing law in effect on the date hereof or as such laws may from
time to time hereafter be amended to increase the scope of such permitted
indemnification if Director was or is a party or threatened to be made a party
to any threatened, pending or completed action, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing, or any other suit
or proceeding of any kind, whether civil, criminal, administrative or
investigative and whether formal or informal (including actions by or in the
right of Corporation and any preliminary inquiry or claim by any person or
authority) (collectively, a "Proceeding"), by reason of the fact that Director
is or was a director, officer, employee or agent of Corporation or is or was
serving at Corporation's request as a director, officer, employee or agent of
another corporation (including a Subsidiary), partnership, joint venture, trust
or other enterprise against liability incurred in connection with such
proceeding, including any appeal thereof (collectively, "Covered Matters"). Such
indemnification will cover all Expenses (as defined in paragraph 5(a) below),
liabilities, judgments (including punitive and exemplary damages), penalties,
fines (including excise taxes relating to employee benefit plans and civil
penalties) and amounts paid in settlement which are incurred or imposed upon
Director in connection with a Covered Matter (collectively, "Indemnified
Amounts").
(b) Notwithstanding the foregoing provisions of paragraph 2(a) above, no
such indemnification shall be made in respect of any claim, issue, or matter as
to which the governing law expressly prohibits such indemnification by reason of
an adjudication of liability of Director to the Corporation; provided, however,
that in such event such indemnification shall nevertheless be made by the
Corporation to the extent that the court in which such action or suit was
brought shall determine equitable under the circumstances.
(c) Notwithstanding any provision of this Agreement, to the extent that
Director has been wholly successful on the merits or otherwise absolved in any
proceeding on any claim, issue or matter, Director shall be indemnified against
all Expenses incurred by Director or on Director's behalf in connection
therewith. If Director 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 Corporation shall indemnify
Director to the maximum extent permitted by law, against all Expenses,
judgments, penalties, fines and amounts paid in settlement, incurred by Director
in connection with each successfully resolved claim, issue, or matter. For
purposes of this paragraph 2, and without limitation, the termination of any
such claim, issue or matter by dismissal with or without prejudice shall be
deemed to be a successful resolution as to such claim, issue or matter.
3. CLAIMS FOR INDEMNIFICATION. Director will give Corporation written
notice of any claim for indemnification under this Agreement. Payment requests
will include a schedule setting
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forth in reasonable detail the amount requested and will be accompanied (or, if
necessary, followed) by copies of the relevant invoices or other documentation.
Upon Corporation's request, Director will provide Corporation with a copy of the
document or pleading, if any, notifying Director of the Covered Matter. To the
extent practicable, Corporation will pay Indemnified Amounts directly without
requiring Director to make any prior payment.
4. DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) Director will be presumed to be entitled to indemnification under
this Agreement and will receive such indemnification, subject to paragraph 4(b)
below, irrespective of whether the Covered Matter involves allegations of
intentional misconduct, alleged violations of Section 16(b) of the Securities
Exchange Act of 1934, alleged violations of Section 10(b) of the Securities
Exchange Act of 1934 (including Rule 10b-5 thereunder), breach of Director's
fiduciary duties (including duties of loyalty or care) or any other claim.
(b) If, in the opinion of counsel to Corporation, applicable law permits
indemnification in a Covered Matter only as authorized in the specific case upon
a determination that indemnification is proper in the circumstances because
Director has met a standard of conduct established by applicable law, and upon
an evaluation of Indemnified Amounts to be paid in connection with such Covered
Matter, the following will apply:
(1) Corporation will give Director notice that a determination and
evaluation will be made under this paragraph 4(b); such notice will be
given immediately after receipt of counsel's opinion that such a
determination and evaluation is necessary and will include a copy of such
opinion.
(2) Such determination and evaluation will be made in good faith, as
follows:
(A) by a majority vote of a quorum of Corporation's Board of
Directors who are not parties or threatened to be made parties to the
Covered Matter in question ("Disinterested Directors") or, if such a
quorum is not obtainable or, even if obtainable, by a majority vote of
a committee of two or more Disinterested Directors who are selected by
the entire Board; or
(B) by an attorney or firm of attorneys, having no previous
relationship with Corporation or Director, which is selected by the
Board of Directors or Committee as prescribed in clause (A) above; or
(C) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding,
or, if no such
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quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(3) Director will be entitled to a hearing before the entire Board
of Directors of Corporation and any other person or persons making the
determination and evaluation under clause (2) above. Director will be
entitled to be represented by counsel at such hearing.
(4) The cost of a determination and evaluation under this paragraph
4(b) (including attorneys' fees and other expenses incurred by Director in
preparing for and attending the hearing contemplated by clause (3) above
and otherwise in connection with the determination and evaluation under
this paragraph 4(b)) will be borne by Corporation.
(5) The determination will be made as promptly as reasonably
possible after notice from counsel to Corporation of the need therefor and,
in any case, promptly as possible after final adjudication of the Covered
Matter.
(6) Evaluation of the reasonableness of expenses and authorization
of indemnification shall be made in the same manner as the determination
that indemnification is permissible. If the determination of permissibility
is made under clause 2(B) above, the same persons shall evaluate the
reasonableness of expenses and may authorize indemnification.
(7) Director will be presumed to have met the required standard of
conduct under this paragraph 4(b) unless it is clearly demonstrated to the
determining body that Director has not met the required standard of
conduct.
(c) Notwithstanding the failure of Corporation to provide
indemnification, and despite any contrary determination of the Board of
Directors or of the shareholders in the specific case, Director may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
5. INDEMNIFICATION FOR EXPENSES OF A WITNESS.
Notwithstanding any other provision of this Agreement, to the extent
that Director is, by reason of the fact that Director is or was a director,
officer, employee or agent of Corporation or any other entity which Director is
or was serving at the request of Corporation, a witness in any Proceeding,
Director shall be indemnified by the Corporation against all Expenses actually
incurred by Director or on Director's behalf in connection therewith.
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6. ADVANCE OF EXPENSES.
(a) Before final adjudication of a Covered Matter, upon Director's
request pursuant to paragraph 3 above, Corporation will promptly either advance
Expenses directly or reimburse Director for all Expenses. As used in this
Agreement, "Expenses" means all costs and expenses (including attorneys' fees,
expert fees, other professional fees and court costs) incurred by Director in
connection with a Covered Matter other than judgments, penalties, fines and
settlement amounts.
(b) Expenses incurred by Director in defending a civil or criminal
proceeding may be paid by Corporation in advance of the final disposition of
such proceeding, only upon receipt of an undertaking by or on behalf of Director
to repay such amount if Director is ultimately found by the court not to be
entitled to indemnification by Corporation.
7. DEFENSE OF CLAIM.
(a) Except as provided in paragraph 7(c) below, Corporation, jointly
with any other indemnifying party, will be entitled to assume the defense of any
Covered Matter as to which Director requests indemnification.
(b) Counsel selected by Corporation to defend any Covered Matter will be
subject to Director's advance written approval, which will not be unreasonably
withheld.
(c) Director may employ Director's own counsel in a Covered Matter and
be fully reimbursed therefor if (1) Corporation approves, in writing, the
employment of such counsel or (2) either (A) Director has reasonably concluded
that there may be a conflict of interest between Corporation and Director or
between Director and other parties represented by counsel employed by
Corporation to represent Director in such action or (B) Corporation has not
employed counsel reasonably satisfactory to Director to assume the defense of
such Covered Matter promptly after Director's request.
(d) Neither Corporation nor Director will settle any Covered Matter
without the other's written consent, which will not be unreasonably withheld.
(e) If Director is required to testify (in court proceedings,
depositions, informal interviews or otherwise), consult with counsel, furnish
documents or take any other reasonable action in connection with a Covered
Matter, Corporation will pay Director a fee for Director's efforts at a rate
equal to the amount payable to Director for attending Board and Board committee
meetings, plus reimbursement for all reasonable expenses incurred by Director in
connection therewith.
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8. DISPUTES; ENFORCEMENT.
(a) If there is a dispute relating to the validity or enforceability of
this Agreement or a denial of indemnification, Advance of Expenses or payment of
any other amounts due under this Agreement or Corporation's Restated Certificate
of Incorporation, as amended, or Bylaws, Corporation will provide such
indemnification, Advance of Expenses or other payment until a final,
non-appealable judgment that Director is not entitled to such indemnification,
Advance of Expenses or other payment has been rendered by the court of last
resort (or by a lower court if not timely appealed). Director will repay such
amounts if such final, non-appealable judgment so requires.
(b) Corporation will reimburse all of Director's reasonable expenses
(including attorneys' fees) in pursuing an action to enforce Director's rights
under this Agreement unless a final, non-appealable judgment against Director
has been rendered in such action by the court of last resort (or by a lower
court if not timely appealed). At Director's request, such expenses will be
advanced by Corporation to Director as incurred before final resolution of such
action by the court of last resort; such expenses will be repaid by Director if
a final, non-appealable judgment in Corporation's favor is rendered in such
action by the court of last resort (or by a lower court if not timely appealed).
9. D&O INSURANCE.
(a) Subject to the provisions of paragraph 9(b) below, to the extent is
reasonably practical in the sole judgment of the Board of Directors, the
Corporation will maintain D&O Insurance in such amount as its Board of Directors
determines appropriate, insuring Director against any liability arising out of
Director's status as a director of Corporation, regardless of whether
Corporation has the power to indemnify Director against such liability under
applicable law.
(b) Corporation will not be required to purchase or maintain D&O
Insurance if the Board of Directors of Corporation determines, after diligent
inquiry, that (1) such insurance is not available; or (2) the premiums for
available insurance are disproportionate to the amount of coverage and to the
premiums paid by other corporations similarly situated. The Board of Directors
of Corporation will, at least annually, in good faith review its decision with
respect to the maintenance of D&O Insurance and will purchase such insurance at
any time that the conditions of the first sentence of this paragraph 9(b) do not
apply. In the event Corporation determines not to renew or replace its D&O
Insurance, it will as soon as practicable provide written notice of such
determination to Director; specifying the date and time such D&O Insurance will
expire.
(c) The parties will cooperate to obtain advances of Expenses,
indemnification payments and consents from D&O Insurance carriers in any Covered
Matter to the full extent of applicable D&O Insurance. The existence of D&O
Insurance coverage will not diminish or limit Corporation's obligation to make
indemnification payments to Director. Amounts paid directly to
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Director with respect to a Covered Matter by Corporation's D&O Insurance
carriers will be credited to the amounts payable by Corporation to Director
under this Agreement.
10. LIMITATIONS OF ACTIONS; LIMITATION OF LIABILITY. No action will be
brought by or on behalf of Corporation against Director or Director's heirs or
personal representatives relating to Director's service as a director, after the
expiration of one year from the date Director ceases (for any reason) to serve
as a Director of Corporation, and any claim or cause of action of Corporation
will be extinguished and deemed released unless asserted by the filing of a
legal action before the expiration of such period.
11. RIGHTS NOT EXCLUSIVE. The indemnification provided to Director under
this Agreement will be in addition to any indemnification provided to Director
by any law, agreement, Board resolution, provision of the Restated Certificate
of Incorporation, as amended, or Bylaws of Corporation or otherwise.
12. SUBROGATION. Upon payment of any Indemnified Amount under this
Agreement, Corporation will be subrogated to the extent of such payment to all
of Director's rights of recovery therefor and Director will take all reasonable
actions requested by Corporation (at no cost or penalty to Director) to secure
Corporation's rights under this paragraph 12 including executing documents.
13. CONTINUATION OF INDEMNITY. All of Corporation's obligations under this
Agreement will continue as long as Director is subject to any actual or possible
Covered Matter, notwithstanding Director's termination of service as a director.
14. AMENDMENTS. Neither Corporation's Restated Certificate of
Incorporation, as amended, nor its Bylaws will be changed to increase liability
of directors or to limit Director's indemnification. Any repeal or modification
of Corporation's Restated Certificate of Incorporation, as amended, or Bylaws or
any repeal or modification of the relevant provisions of any applicable law will
not in any way diminish any of Director's rights or Corporation's obligations
under this Agreement. This Agreement cannot be amended except with the written
consent of Corporation and Director.
15. GOVERNING LAW. This Agreement will be governed by Delaware law.
16. DURATION; SUCCESSORS.
(a) This Agreement shall apply to any claim asserted and any Expenses
incurred in connection with any claim asserted on or after the effective date of
this Agreement and shall continue until and terminate upon the later of: (a) 10
years after Director has ceased to occupy any of the positions or have any of
the relationships described in Section 2(a) of this Agreement, or (b) one year
after the final termination of all Proceedings of the kind described
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herein with respect to Director which are pending or threatened as of the date
this Agreement would otherwise terminate. This Agreement will be binding upon
and inure to the benefit of the parties and their respective heirs, legal
representatives and assigns.
(b) Corporation will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Corporation to assume all of Corporation's
obligations under this Agreement. Such assumption will not release Corporation
from its obligations under this Agreement.
17. SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the remaining provisions of this Agreement will not in any way be affected or
impaired but will remain binding in accordance with their terms.
18. NOTICES. All notices given under this Agreement will be in writing and
delivered either personally, by registered or certified mail (return receipt
requested, postage prepaid), by recognized overnight courier or by telecopy (if
promptly followed by a copy delivered personally, by registered or certified
mail or overnight courier), as follows:
If to Director:
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If to Corporation: Educational Medical, Inc.
0000 Xxxxxxxxxxx Xxxxxxx, #000
Xxxxxxx, Xxxxxxx 00000
or to such other address as either party furnishes to the other in writing.
19. COUNTERPARTS. This Agreement may be signed in counterpart.
20. SUBSIDIARIES. As used in this Agreement, the term "Subsidiary" means
any corporation in which Corporation owns a majority interest.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
written above.
EDUCATIONAL MEDICAL, INC. a Delaware
corporation,
By:
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Authorized Signatory
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, Director
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