FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered
into as of this ____ day of _______________, 1998, by and between LTC
Healthcare, Inc., a Nevada corporation (the "Corporation"), and
_______________________ (the "Indemnitee").
A. At the request of the Corporation, the Indemnitee currently
serves as a director and/or officer of the Corporation (and may from time to
time serve as a directors and/or officer of one or more of the Corporation's
subsidiaries), and, as such, may be subjected to claims, actions, suits or
proceedings arising out of or as a result of this service;
B. The Corporation is currently seeking to obtain a policy of
directors and officers liability insurance ("D&O Insurance") covering certain
liabilities that may be incurred by the Indemnitee as a director and/or officer;
C. Due to the fact that the indemnification provisions of Chapter 78
of the Nevada Revised Statutes ("NRS"), the Corporation's Restated and Amended
Articles of Incorporation (the "Articles") and the Corporation's Restated and
Amended Bylaws (the "Bylaws, and together with NRS and the Articles, the
"Indemnification Provisions") may be amended, modified or repealed, that the
Corporation may be unable to purchase or to continue to purchase and maintain
adequate D&O Insurance, and that there may be other substantial uncertainties
associated with the Indemnification Provisions and D&O Insurance, the Indemnitee
does not regard the rights to indemnification granted to him or her under the
Indemnification Provisions and D&O Insurance as adequate to protect him or her
against the risks associated with service as a director and/or officer of the
Corporation, and the Indemnitee may be unwilling to continue to serve as a
director and/or officer of the Corporation in the absence of the benefits and
assurances provided to him or her under this Agreement;
D. As an inducement to the Indemnitee to continue to serve as a
director and/or officer, the Corporation has agreed to indemnify the Indemnitee
against expenses and costs incurred by the Indemnitee in connection with certain
claims, actions, suits or proceedings in accordance with this Agreement; and
E. The parties are desirous of setting forth the terms and
conditions of their understandings and agreements in the foregoing respects and
other matters properly relating thereto.
NOW THEREFORE, based upon the foregoing recitals and in consideration
of the mutual promises and covenants herein contained, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. EXPENSES. "Expenses" shall mean any and all expenses
(including, without limitation, attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the Indemnitee in
connection with any Action.
Section 1.2. ACTION. "Action" shall mean a threatened, pending or
completed action, suit or proceeding (including, without limitation, an action,
suit or proceeding by or in the right of the Corporation), whether civil,
criminal, administrative or investigative, that arises by reason of the fact
that the Indemnitee is or was a director, officer, employee or agent of the
Corporation, or that he or she is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
ARTICLE II.
INDEMNITY
Section 2.1. RIGHT TO INDEMNIFICATION. Notwithstanding any
amendment, modification or repeal of the Indemnification Provisions after the
date of this Agreement, the Corporation shall indemnify and hold the Indemnitee
harmless against any and all Expenses, except:
(a) D&O INSURANCE. Expenses for which the Indemnitee is
indemnified pursuant to any D&O Insurance purchased and maintained by the
Corporation. It is specifically understood that the indemnity provided in this
Agreement is in excess of any such D&O Insurance and the Indemnitee will look
first to such D&O Insurance;
(b) VIOLATION OF LAW. Amounts paid to the Indemnitee if it
shall be determined by a final judgment or other final adjudication that such
amounts were in violation of the law;
(c) VIOLATION OF SECTION 16(b) OF THE SECURITIES EXCHANGE ACT.
Expenses incurred on account of any action in which judgment is rendered against
the Indemnitee for an accounting of profits made from the purchase or sale of
securities of the Corporation by the Indemnitee, pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
any similar provisions of federal, state or local law;
(d) OTHER EXPENSES. Expenses incurred on account of the
Indemnitee's conduct that is finally adjudged to have been (or the Indemnitee
has admitted facts sufficient to conclude his or her conduct was): (i) an act
or omission that was not in good faith and which the Indemnitee did not
reasonably believe to be in the best interests of the Corporation, (ii) with
respect to any criminal action or proceeding, conduct which the Indemnitee had
reasonable cause to believe was unlawful, (iii) an act or omission involving
intentional misconduct, fraud or a knowing violation of law (except with respect
to the advancement of expenses pursuant to Section 2.3 of this Agreement or
indemnification ordered by a court of competent jurisdiction),
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(iv) a transaction from which the Indemnitee derived an improper personal
benefit, or (v) the payment of distributions in violation of NRS 78.300 and
amendments thereto or any other similar provision of state law;
(e) PUBLIC POLICY. If a final decision by a court of competent
jurisdiction in the matter shall determine that such indemnification violates
public policy; or
(f) INCOME TAXES. Any income taxes, or any interests and
penalties related thereto with respect to any compensation received for services
as a director and/or officer of the Corporation.
Section 2.2. CONTINUATION OF INDEMNITY. All agreements and
obligations of the Corporation contained in this Agreement shall continue during
the period the Indemnitee is a director, officer, employee or agent of the
Corporation (or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise), and shall continue so long as the
Indemnitee shall be subject to any possible action by reason of the fact that
the Indemnitee was a director or officer of the Corporation or serving in any
other capacity referred to in this Agreement.
Section 2.3. ADVANCEMENT OF EXPENSES. Notwithstanding any
amendment, modification or repeal of the Indemnification Provisions after the
date of this Agreement, on written request to the Corporation by Indemnitee, the
Corporation shall pay the Expenses of the Indemnitee incurred in defending an
Action as they are incurred and in advance of the final disposition of the
Action, upon receipt of an undertaking by or on behalf of the Indemnitee to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that he or she is not entitled to be indemnified by the Corporation
pursuant to Section 2.1 of this Agreement.
Section 2.4. DEMAND FOR PERFORMANCE. The Corporation shall perform
its obligations under this Agreement upon receipt of written demand for such
performance from the Indemnitee, and, if the Corporation fails to perform its
obligations under this Agreement upon demand, the Indemnitee may then at any
time bring legal action against the Corporation to obtain full and complete
performance of its obligations under this Agreement. In any action brought to
enforce this Agreement, upon a showing by the Indemnitee that a claim has been
asserted against him or her with respect to or in connection with any alleged
act or omission by him or her as a director and/or officer of the Corporation,
or any alleged neglect or breach of duty by him or her as a director and/or
officer of the Corporation or otherwise in his or her capacity as a director
and/or officer of the Corporation, there shall be a presumption that the
Indemnitee is entitled to indemnification and advancement of Expenses from the
Corporation.
Section 2.5. NON-EXCLUSIVITY. The rights to indemnification granted
to Indemnitee under this Agreement shall not be exclusive or in limitation of
any rights to which the Indemnitee may have or hereafter acquire under any
statute, provision of the Articles or Bylaws, agreement, vote of the
stockholders or directors of the Corporation or otherwise.
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ARTICLE III.
CONTROL OF DEFENSE
Section 3.1. CONTROL OF DEFENSE. If a claim should be made or
threatened against the Indemnitee that has given rise to, or may give rise to, a
right to indemnification pursuant to Section 2.1 of this Agreement, or a right
to advancement of Expenses pursuant to Section 2.3 of this Agreement, and
provided that the claim is not made or threatened in the name of the Corporation
and there is no conflict of interest between the Corporation and the Indemnitee
with respect to such claim, then: (1) the Corporation shall have the right to
participate, at its own cost and expense, in the investigation, defense or other
contest of the claim; and (2) the Corporation shall have the right to elect to
assume the defense of the claim on behalf of the Indemnitee, and, if applicable,
jointly with any third party who may have an obligation to indemnify and hold
the Indemnitee harmless with respect to such claim.
Section 3.2. CONFLICT OF INTEREST. If a conflict of interest of the
type referred to in Section 3.1 should develop, the Indemnitee shall control the
defense of any Action against him or her that may give rise to a right of
indemnification under this Agreement, subject to the following: (1) if the
insurance carrier that shall have supplied any D&O Insurance shall be willing to
conduct the defense without any reservation as to coverage, then, the insurance
carrier shall select counsel to conduct the defense; (2) if the insurance
carrier shall not assume responsibility for the defense without any reservation
of rights as to coverage, the defense shall be conducted by experienced and able
counsel selected by the Indemnitee and reasonably acceptable to the board of
directors; and (3) separate counsel will be used by the Indemnitee and other
parties indemnified by the Corporation and subject to the same claim only to the
extent necessary, in the reasonable opinion of the Indemnitee, to avoid a
conflict of interest.
Section 3.3. ELECTION TO DEFEND. If the Corporation should elect to
assume the defense of a claim on behalf of the Indemnitee as provided in Section
3.1 (the "Election"), then: (1) the Corporation shall give the Indemnitee
prompt written notice of the Election (the "Election Notice"); (2) the
Corporation shall be obligated to defend the claim in good faith and in a manner
consistent with the best interests of the Indemnitee; (3) provided the
Corporation defends the claim in good faith and no conflict of interest develops
between the Corporation and the Indemnitee with respect to such claim, the
Corporation shall not be liable for any Expenses incurred by the Indemnitee in
connection with defending or otherwise contesting the claim after the Indemnitee
has received the Election Notice; and (4) the Corporation shall not settle or
compromise such the claim on any basis or in any manner that would impose any
liability, limitation or restriction of any kind on the Indemnitee without his
or her express written consent.
ARTICLE IV.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
Section 4.1. PROVIDED IN SOLE DISCRETION OF CORPORATION. The
Corporation shall use reasonable efforts to provide the Indemnitee with D&O
Insurance providing to the Indemnitee such coverage then available in the
insurance industry in such amounts and with such exclusions and other conditions
to coverage as shall in the sole judgment of the Corporation
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provide reasonable coverage to the Indemnitee in light of the cost to the
Corporation and any other relevant considerations. Notwithstanding any of the
foregoing, the Corporation shall not be obligated to obtain D&O Insurance for
the Indemnitee.
Section 4.2. SETTLEMENT. The Indemnitee shall not settle any matter
for which he or she intends to seek indemnification under this agreement without
first attempting to obtain any approval required with respect to such settlement
by the insurance carrier of any applicable D&O Insurance. If the Indemnitee
seeks such approval, but the approval is not granted by the insurance carrier of
any applicable D&O Insurance, the Indemnitee shall be entitled to
indemnification to the fullest extent provided by this Agreement.
Section 4.3. NO LIMITATION OF OBLIGATION. Except as otherwise set
forth in Section 2.1(a) or the provisions of the D&O Insurance, the failure to
provide D&O Insurance shall in no way limit or diminish the obligation of the
Corporation to indemnify the Indemnitee as provided pursuant to the terms of
this Agreement.
ARTICLE V.
MISCELLANEOUS
Section 5.1. NOTICES. Any notices, consents or other communications
required or permitted to be given pursuant to this Agreement must be in writing
and must be given by certified mail, return receipt requested, and shall (except
to the extent otherwise provided herein) be deemed to have been given and
received (whether actually received or not) when a certified letter containing
such notice, consent or other communication, properly addressed with postage
prepaid, return receipt requested, is deposited in an official depository under
the regular care and custody of the United States Postal Service located within
the confines of the continental United States, addressed to the parties hereto
at the following respective addresses:
If to the Corporation: LTC Healthcare, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx
With a copy to: Xxxxxxx Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
If to the Indemnitee: ___________________________
___________________________
___________________________
Either party may provide written notice of a substitute address
pursuant to written notice delivered to the other party in accordance with the
terms of this Section 5.1, provided, however, that no such notice of change of
address shall be effective unless and until actually received by the party to
whom such notice is sent.
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Section 5.2. APPLICABLE LAW. The laws of the State of Nevada
applicable to contracts made in that State shall govern the validity,
construction, performance and effect of this Agreement.
Section 5.3. ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding of the parties, and supersedes all previous agreements,
negotiations, memoranda, understandings, whether oral or written (other than the
Indemnification Provisions or the provisions of applicable D&O Insurance).
Section 5.4. MODIFICATIONS. This Agreement shall not be modified,
amended or changed in any matter unless in writing executed by the parties
hereto.
Section 5.5. ATTORNEYS' FEES. Unless otherwise specifically
provided herein, each party hereto shall bear its own attorneys' fees incurred
in the negotiation and preparation of this Agreement and any related documents.
In the event that any action or proceeding is instituted to interpret or enforce
the terms and provisions of this Agreement, however, the prevailing party shall
be entitled to its costs and attorneys' fees, in addition to any other relief it
may obtain or be entitled to.
Section 5.6. WAIVERS. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver, and
no waiver shall be binding unless evidenced by an instrument in writing executed
by the party making the waiver.
Section 5.7. INVALIDITY. If any term, provision, covenant or
condition of this Agreement, or any application thereof, should be held by a
court of competent jurisdiction to be invalid, void or unenforceable, that
provision shall be deemed severable and all provisions, covenants and conditions
of this Agreement, and all applications thereof not held invalid, void or
unenforceable, shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
Section 5.8. COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in any number of counterparts, each of which may be
executed by any one or more of the parties hereto, but all of which shall
constitute one and the same instrument, and shall be binding and effective only
when all of the parties hereto have executed at least one counterpart.
Section 5.9. INTERPRETATION. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement. Whenever the context of this Agreement
requires, words used in the singular shall be construed to include the plural
and vice versa, and pronouns of whatsoever gender shall be deemed to include and
designate the masculine, feminine and neuter gender.
Section 5.10. ADDITIONAL DOCUMENTS. Each party covenants and agrees
to execute deliver to the other such further documents or instruments as may
reasonably be required to fully effectuate the manifest intent of the parties
and the transactions contemplated hereby.
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Section 5.11. NEGOTIATED AGREEMENT. This is a negotiated Agreement.
All parties have participated in its preparation. In the event of any dispute
regarding its interpretation, it shall not be construed for or against any party
based upon the grounds that the Agreement was prepared by any one of the
parties.
Section 5.12. TIME OF ESSENCE. Time is of the essence of the
Agreement and all of its provisions.
Section 5.13. SUCCESSORS AND ASSIGNS. the rights granted to the
Indemnitee under this Agreement shall inure to the benefit of the Indemnitee,
his or her personal representatives, heirs, executors, administrators and
beneficiaries, and this Agreement shall be binding on the Corporation, its
successors and assigns.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day first hereinabove written.
"Corporation"
LTC Healthcare, Inc.,
a Nevada corporation
By: ___________________________________
Name: ________________________________
Its: ___________________________________
"Indemnitee"
_______________________________________
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