Careview 8-K
Exhibit 10.5
CAREVIEW COMMUNICATIONS, INC.
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION
AGREEMENT is entered into and is effective as of June 21, 2010, by and between CareView Communications, Inc., a Nevada corporation
(the “Company”), and Xxxxxx X. Xxxxx (“Indemnitee”).
WHEREAS, it is
essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee
is a director and/or officer of the Company;
WHEREAS, both the
Company and Indemnitee recognize the increased risk of litigation that may be asserted against directors and officers of corporations;
WHEREAS, the Company’s
Articles of Incorporation permits, and Bylaws of the Company require, the Company to indemnify and advance expenses to its directors
and officers to the fullest extent permitted under Nevada law, and the Indemnitee has been serving and continues to serve as a
director and/or officer of the Company in part in reliance on the Company’s Articles of Incorporation and Bylaws;
WHEREAS, in recognition
of Indemnitee’s need for substantial protection against personal liability in order to enhance the Indemnitee’s continued
and effective service to the Company and, specific contractual assurance that the protection promised by the Articles of Incorporation
and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Articles of
Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction
relating to the Company), and in order to induce Indemnitee to provide effective services to the Company as a director and/or officer,
the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest
extent (whether partial or complete) permitted under Nevada law and as set forth in this Agreement, and, to the extent insurance
is maintained which includes Indemnitee as a covered party, to provide for the continued coverage of Indemnitee under the Company’s
directors’ and officers’ liability insurance policies;
NOW, THEREFORE,
in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties agree as follows:
1. Certain
Definitions.
(a) “Board”
shall mean the Board of Directors of the Company.
(b) “Change
in Control” shall be deemed to have occurred if (i) any ‘person’ (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’)), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes
the ‘beneficial owner’ (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by the Company’s then outstanding Voting Securities,
or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote
of at least two-thirds (2/3) 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 a majority of the Board,
or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity, other than
a merger or consolidation that would result in the
Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities
of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series
of transactions) of all or substantially all of the Company’s assets.
(c) “Expenses”
shall mean any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local,
or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, and all other costs
and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including
on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
(d) “Indemnifiable
Event” shall mean any event or occurrence that takes place either prior to or after the execution of this Agreement,
related to the fact that Indemnitee is or was a director and/or officer of the Company, or while a director or officer is or was
serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of a subsidiary of the Company
or of any other foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise,
or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company
or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee
in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer,
employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the Company, as described
above.
(e) “Independent
Counsel” shall mean counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification
matters) within the last three years.
(f) “Proceeding”
shall mean any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism
(including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company
or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding,
whether civil, criminal, administrative, investigative, or other.
(g) “Voting
Securities” shall mean any securities of the Company that vote generally in the election of directors.
2. Agreement
to Indemnify.
(a) General Agreement. In
the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to
or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall
indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter
be amended or interpreted. The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly
permitted by statute, including, without limitation, any indemnification provided by the Company’s Articles of Incorporation,
its Bylaws, vote of its stockholders or disinterested directors, or applicable law. The only limitation that shall exist upon the
Company’s obligations pursuant to this Section 2 shall be that the Company shall not be obligated to make any payment
to Indemnitee that is finally determined by a court of competent jurisdiction in a final judgment, not subject to appeal, to be
unlawful.
(b) Initiation
of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding or part thereof initiated by Indemnitee against the Company or any
director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such
Proceeding or part thereof; (ii) the Proceeding or part thereof is one to enforce indemnification rights under Section 4;
or (iii) the Proceeding or part thereof is instituted
after a Change in Control (other than
a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in
Control) and Independent Counsel has approved its initiation.
(c) Expense
Advances. If so requested by Indemnitee, the Company shall advance (within thirty business days of such request) any and
all Expenses incurred by Indemnitee (an “Expense Advance”). The Indemnitee shall qualify for such Expense Advances
upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee
undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction
in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Until it is so finally
determined by the court that Indemnitee is not entitled to indemnification, Indemnitee shall not be required to repay such Expense
Advances to the Company and Indemnitee shall continue to receive Expense Advances pursuant to this Section 2(c). Indemnitee’s
obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon. To the extent
permissible under third party policies, the Company agrees that invoices for Expense Advances shall be billed in the name of and
be payable directly by the Company.
(d) Mandatory
Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of
any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
(e) 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. Attorneys’ fees and expenses shall not be prorated but shall be
deemed to apply to the portion of indemnification to which Indemnitee is entitled.
(f) Prohibited
Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding
in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company pursuant to the provisions of Section 16(b) of the Exchange Act, or similar provisions of any federal, state,
or local laws.
3. Indemnification
Process and Appeal.
(a) Indemnification
Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company
in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification,
unless indemnification of such Expenses is prohibited under Section 2(f) of this Agreement.
(b) Suit
to Enforce Rights. If Indemnitee has not received full advancement within thirty (30) days or full indemnification
within ninety (90) days after making a demand in accordance with Section 3(a), Indemnitee shall have the right to enforce
its indemnification rights under this Agreement by commencing litigation in the State of Texas, County of Xxxxxx, seeking an initial
determination by the court or challenging any determination by the Company or any aspect thereof. The Company hereby consents to
service of process and to appear in any such proceeding. The remedy provided for in this Section 3 shall be in addition to
any other remedies available to Indemnitee at law or in equity. The Company shall be precluded from asserting in any judicial proceeding
commenced pursuant to this Section 3(b) that the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate that the Company is bound by all the provisions of this Agreement.
(c) Defense
to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against
the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding
in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for
the amount claimed. In connection with any such action to whether Indemnitee is entitled to be indemnified hereunder, the burden
of proving such a defense or determination shall be on the Company to establish by clear and convincing evidence that Indemnitee
is not so
entitled to indemnification. It is the
parties’ intention that if Indemnitee commences legal proceedings to secure a judicial determination that Indemnitee should
be indemnified under this Agreement or applicable law, the question of Indemnitee’s right to indemnification shall be for
the court to decide, as a de novo trial on the merits.
(d) To the maximum
extent permitted by applicable law in making a determination with respect to entitlement to indemnification (or advancement of
expenses) hereunder, the Company shall presume that Indemnitee is entitled to indemnification (or advancement of expenses) under
this Agreement if Indemnitee has submitted a request for advancement under Section 2(c) of this Agreement for indemnification
in accordance with Section 3(a) of this Agreement, and the Company shall have the burden of proof to overcome that assumption
by clear and convincing evidence in connection with the making of any determination contrary to that presumption.
(e) The Company
acknowledges that a settlement or other disposition of a Proceeding short of final judgment may constitute success by Indemnitee
if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which
Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation,
settlement of such Proceeding without payment of money or other consideration) it shall be presumed (unless there is clear and
convincing evidence to the contrary) that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone
seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.
4. Indemnification
for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are
incurred by Indemnitee in connection with any action brought by Indemnitee for:
(a) indemnification
or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company’s
Articles of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or
(b) recovery under
directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee
ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be.
In addition, the Company shall, if so
requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).
5. Notification
and Defense of Proceeding.
(a) Notice. Promptly
after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify
the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 5(c).
(b) Defense. With
respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled
to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes,
it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or
otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable
costs of investigation, transition costs associated with the Company’s assumption of the defense, or as otherwise provided
below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment
of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may
be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control
(other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such
Change in
Control), the employment of counsel
by Indemnitee that has been approved by Independent Counsel, or (iv) the Company shall not in fact have employed counsel to
assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee
shall have made the determination provided for in (ii), (iii) and (iv) above.
(c) Settlement
of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid
in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld;
provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors
on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of
Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle
any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s prior written
consent. The Company shall promptly notify Indemnitee once the Company has received an offer or intends to make an offer to settle
any such Proceeding and the Company shall provide Indemnitee as much time as reasonably practicable to consider such offer; provided,
however Indemnitee shall have no less than three (3) business days to consider the offer. The Company shall not be liable
to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and
timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall
not be excused if participation in the Proceeding by the Company was barred by this Agreement.
6. Non-Exclusivity. Except
with regard to the Company’s primary obligations, as set forth in Section 10 hereof, the rights of Indemnitee hereunder
shall be in addition to any other rights Indemnitee may have under the Company’s Articles of Incorporation, Bylaws, applicable
law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company
and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification
than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement,
it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change without
any further action by the parties hereto.
7. Liability
Insurance.
(a) The Company
hereby covenants and agrees that, so long as the Indemnitee shall continue to serve as an agent of the Company and thereafter so
long as the Indemnitee shall be subject to any possible proceeding by reason of the fact that the Indemnitee was an agent of the
Company, the Company, subject to Section 7(b), shall use reasonable efforts to obtain and maintain in full force and effect
directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established
and reputable insurers and Indemnitee shall be a covered party under such insurance to the maximum extent of the coverage available
for any director or officer of the Company.
(b) Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith
that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage
provided, or the coverage is reduced by exclusions so as to provide an insufficient benefit.
8. Amendment
of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing
by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing
signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided
herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
9. Subrogation. Except
with regard to the Company’s primary obligations, as set forth in Section 10 hereof, in the event of 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 shall do everything that may be
necessary to secure such rights, including
the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
10. No
Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise)
of the amounts otherwise indemnifiable hereunder; provided, however, that (a) the Company hereby agrees that its obligations
to Indemnitee under this Agreement or any other agreement or undertaking to provide advancement, indemnification or both to Indemnitee
are primary. In addition, the Company hereby unconditionally and irrevocably waives, relinquishes, releases, and covenants and
agrees not to exercise, any rights that the Company may now have or hereafter acquires against the Indemnitee that arise from or
relate to contribution, subrogation or any other recovery of any kind under this Agreement or any other indemnification agreement
(whether pursuant to the Bylaws or Articles or another contract). The Company and Indemnitee hereby agree that this Section 10
shall be deemed exclusive and shall be deemed to modify, amend and clarify any right to indemnification or advancement provided
to Indemnitee under any other contract, agreement or document with the Company.
11. Binding
Effect. 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. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise
to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives.
The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the
time of any Proceeding.
12. Severability. If
any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or
otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore,
to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable)
shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.
13. Third-Party
Beneficiary. Independent Counsel is express third-party beneficiaries of this Agreement, and may specifically enforce the Company’s
obligations hereunder (including, but not limited to, the obligations specified in Section 10 hereof) as though a party hereunder.
14. Governing
Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas
applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts of laws.
15. Consent
to Jurisdiction. The Company and Indemnitee hereby irrevocably (i) agree that any action or proceeding arising out
of or in connection with this Agreement shall be brought only in the State of Texas, County of Xxxxxx, (ii) consent to submit
to the exclusive jurisdiction of the State of Texas, County of Xxxxxx, for purposes of any action or proceeding arising out of
or in connection with this Agreement, and (iii) waive any objection to the venue of any such action or proceeding in the State
of Texas, County of Xxxxxx.
16. Notices.
All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have
been duly given if delivered by hand, against receipt or mailed, postage prepaid, certified or registered mail, return receipt
requested and addressed to the Company at:
CareView Communications,
Inc.
Attn: Xxxxxx X.
Xxxxxxx, President
000 Xxxxx Xxxxxxx
000, Xxxxx X-000
Xxxxxxxxxx, XX
00000
and to Indemnitee at:
Xxxxxx X. Xxxxx
0000 Xxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Notice of change of address shall be effective
only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received
on the date of hand delivery or on the third business day after mailing.
17. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
(Signature page follows)
IN WITNESS WHEREOF,
the parties hereto have duly executed and delivered this Agreement as of the day specified above.
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CAREVIEW COMMUNICATIONS, INC. |
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By: |
/s/ Xxxxxx X. Xxxxxxx |
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Xxxxxx X. Xxxxxxx |
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President |
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/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, an individual |
