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EXHIBIT 10.6
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made on _____________, between
COMPREHENSIVE CARE CORPORATION, a Delaware corporation (the "Company"), and
________________, an officer and/or member of the Board of Directors of the
Company.
WHEREAS, the Company desires the benefits of having Indemnitee serve as an
officer and/or director secure in the knowledge that expenses, liability and
losses incurred by him in his good faith service to the Company will be borne
by the Company or its successors and assigns in accordance with applicable
law; and
WHEREAS, the Company desires that Indemnitee resist and defend against what
Indemnitee may consider to be unjustified investigations, claims, actions,
suits and proceedings which have arisen or may arise in the future as a result
of Indemnitee's service to the Company notwithstanding that conditions in the
insurance markets may make directors' and officers' liability insurance
coverage unavailable or available only at premium levels which the Company may
deem inappropriate to pay; and
WHEREAS, the parties believe it appropriate to memorialize and reaffirm the
Company's indemnification obligations to Indemnitee and, in addition, set forth
the indemnification agreements contained herein;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties agree as follows:
1. Indemnification. Indemnitee shall be indemnified and held harmless by the
Company to the fullest extent permitted by its Certificate of Incorporation,
Bylaws and applicable law, as the same exists or may hereafter be amended,
against all expenses, liability and loss (including attorneys' fees, judgments,
fines, and amounts paid or to be paid in any settlement approved in advance by
the Company, such approval not to be unreasonably withheld) (collectively,
"Indemnifiable Expenses") actually reasonably incurred or suffered by
Indemnitee in connection with any present or future threatened, pending or
contemplated investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, "Indemnifiable
Litigation"), (i) to which Indemnitee is or was a party or is threatened to be
made a party by reason of any action or inaction in Indemnitee's capacity as a
director or officer of the Company, or (ii) with respect to which Indemnitee is
otherwise involved by reason of the fact that Indemnitee is or was serving as a
director, officer, employee or agent of the Company, or of any subsidiary or
division, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise. Notwithstanding the foregoing, Indemnitee shall
have no right to indemnification for expenses and the payment of profits
arising from the purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Securities and Exchange Act of 1934, as amended.
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2. Interim Expenses. The Company agrees to pay Indemnifiable Expenses
incurred by Indemnitee in connection with any Indemnifiable Litigation in
advance of the final disposition thereof, provided that the Company has
received an undertaking by or on behalf of Indemnitee, substantially in the
form attached hereto as Exhibit A, to repay the amount so advanced to the
extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company under this Agreement or otherwise.
3. Trust Fund.
(a) The Company may, but is not obligated to, establish a trust (the
"Trust") to fund certain of its obligations under this Agreement and similar
agreements with other directors and/or officers (collectively, including
Indemnitee, the "Beneficiaries"). Therefore, in such event, in addition to
Indemnitee's rights under this Indemnification Agreement and any applicable
insurance policy, Indemnitee shall also have the right to seek indemnification
payments from the Trustee of the trust in accordance with the terms of this
Agreement and of the trust agreement.
(b) All communications or demands made by and among the Trustee and the
Beneficiaries are to be made through the individual designated as the
Beneficiaries' Representative. As of the date of this Agreement, a Trust has
not been established, nor has a Beneficiaries' Representative been designated.
The Beneficiaries' Representative shall be designated and may be changed from
time to time and at any time upon agreement of two-thirds of the Beneficiaries
at such time.
4. Procedure for Making Demand. In order to receive payment, including
advance payments as set forth in Paragraph 2, Indemnitee shall make demand upon
the Company to honor its indemnity obligations and pay the Indemnifiable
Expenses. If the Company fails to do so within fifteen (15) days, the
Indemnitee shall then have the right and obligation to make demand under any
applicable policy of directors' and officers' liability insurance then in
effect upon the insurance company (the "Insurance Company") issuing such
policy. If Insurance Company fails to pay the demand within fifteen (15) days,
then if a Trust shall have been established, the Indemnitee, through the
Beneficiaries' Representative, shall then be entitled and obligated to make
demand upon the Trustee for such payment. Indemnitee shall not be required to
institute a lawsuit or take other actions against the Company, Insurance
Company or any insurer to recover the unpaid amount prior to the Beneficiaries'
Representative making a demand and receiving payment from the Trustee on his
behalf, but the Beneficiaries' Representative shall deliver a certificate to
the Trustee at the time of payment of each distribution certifying that no part
of such payment has been previously received from the Company or any insurer.
5. Failure to Indemnify.
(a) If a claim under this Agreement, or any statute, or under any
provision of the Company's Certificate of Incorporation or Bylaws providing for
indemnification, is not paid in full by the Company, Insurance Company or
Trustee, if the Trust Fund shall have been established, within forty-five (45)
days after a written request for payment thereof has been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, if
successful in whole or in part, Indemnitee shall also be entitled to be paid
for the expense (including attorneys' fees) of bringing such action.
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(b) It shall be a defense to such action (other than an action brought to
enforce a claim for expenses incurred in connection with any action, suit or
proceeding in advance of its final disposition) that Indemnitee has not met the
standard of conduct which make it permissible under applicable law for the
Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled
to receive interim payments of interim expenses pursuant to Section 2 hereof
unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including its board
of directors, any committee or subgroup of the board of directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
6. Retention of Counsel.
(a) Whether Indemnitee is seeking payment of Indemnifiable Expenses
directly from the Company or from the Trustee, the Indemnitee or the
Beneficiaries' Representative, if the Trust Fund shall have been established,
shall have the right and obligation on behalf of Indemnitee and other
Beneficiaries, in the case of the Beneficiaries' Representative, to (i) seek
counsel to represent Indemnitee with respect to any matter subject to
indemnification and payment hereunder; (ii) coordinate the defense of any such
matter; and (iii) approve the fees and other expenses of such counsel.
(b) Notwithstanding the foregoing, Indemnitee may retain different counsel
than the other Indemnitees or Beneficiaries, or may incur expenses not shared
in common with the other Indemnitees or Beneficiaries, in connection with any
Indemnifiable Litigation if in the reasonable judgment of Indemnitee there may
be legal defenses available to him which are different from or additional to
those available to the other Indemnitees or Beneficiaries and, as a
consequence, an actual or potential conflict of interest with the other
Indemnitees or Beneficiaries exists. If the Trust Fund shall have been
established, Indemnitee must obtain the prior written approval of the
Beneficiaries' Representative to retain such counsel, which consent shall not
be unreasonably withheld. In the event that the Beneficiaries' Representative
withholds such consent, Indemnitee shall then have the right to seek approval
for such separate counsel from the Trustee, which approval shall not be
unreasonably withheld.
(c) Nothing contained herein shall prohibit Indemnitee from retaining other
counsel at Indemnitee's own expense.
7. Successors. This Agreement establishes contract rights which shall be
binding upon, and shall inure to the benefit of, the successors, assigns, heirs
and legal representatives of the parties hereto.
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8. Contract Rights Not Exclusive. The contract rights conferred by this
Agreement shall be in addition to, but not exclusive of, any other right which
Indemnitee may have or may hereafter acquire under any statute, provision of
the Company's Certificate of Incorporation or Bylaws, agreement, vote of
shareholders or disinterested directors, or otherwise.
9. Indemnitee's Obligations. The Indemnitee shall promptly advise the
Company in writing of the institution of any investigation, claim, action, suit
or proceeding which is or may be subject to this Agreement and keep the Company
generally informed of, and consult with the Company with respect to, the status
of any such investigation, claim, action, suit or proceeding. Notices to the
Company shall be directed to Comprehensive Care Corporation, 16305 Swingley
Ridge Drive, Suite 100, Chesterfield, Missouri 63017, Attn: President (or
other such address as the Company shall designate in writing to Indemnitee).
Notice shall be deemed received three days after the date postmarked if sent by
certified or registered mail, properly addressed. In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
10. Severability. Should any provision of this Agreement, or any clause
thereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of this Agreement shall remain fully
enforceable and binding on the parties.
11. Modification and Waiver. 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
deemed or shall constitute a waiver of any other provisions hereof (whether of
not similar) nor shall such waiver constitute a continuing waiver.
12. Choice of Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
COMPREHENSIVE CARE CORPORATION
By:_________________________________________
INDEMNITEE
_________________________________________
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EXHIBIT A
UNDERTAKING AGREEMENT
THIS UNDERTAKING AGREEMENT (this "Agreement") is made on
_____________, between COMPREHENSIVE CARE CORPORATION, a Delaware corporation
(the "Company") and ________________, a member of the board of directors or an
officer of the Company ("Indemnitee").
WHEREAS, Indemnitee may become involved in investigations, claims,
actions, suits or proceedings which have arisen or may arise in the future as a
result of Indemnitee's service to the Company; and
WHEREAS, Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorneys' fees and court costs) actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in defending or
investigating any such suits or claims and that such payment be made in advance
of the final disposition of such investigations, claims, actions, suits or
proceedings to the extent that Indemnitee has not been previously reimbursed by
insurance; and
WHEREAS, the Company is willing to make such payments but, in
accordance with Section 145 of the General Corporation Law of the State of
Delaware, the Company may make such payments only if it receives an undertaking
to repay from Indemnitee; and
WHEREAS, Indemnitee is willing to give such an undertaking;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. In regard to any payments made by the Company to
Indemnitee pursuant to the terms of the Indemnification Agreement
dated March 7, 1994, between the Company and Indemnitee, Indemnitee
hereby undertakes and agrees to repay to the Company any and all
amounts so paid promptly and in any event within thirty (30) days
after the disposition, including any appeals, of any litigation or
threatened litigation on account of which payments were made, but only
to the extent that Indemnitee is ultimately found not to be entitled
to be indemnified by the Company under the Bylaws of the Company and
Section 145 of the General Corporation Law of the State of Delaware,
or other applicable law.
2. This Agreement shall not affect in any manner rights
which Indemnitee may have against the Company, any insurer or any
other person to seek indemnification for or reimbursement of any
expenses referred to herein or any judgment which may be rendered in
any litigation or proceeding.
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IN WITNESS WHEREOF, the parties have caused this Undertaking Agreement
to be executed on the date first above written.
COMPREHENSIVE CARE CORPORATION
By:_________________________________________
INDEMNITEE
_________________________________________
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