INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("AGREEMENT") is made as of this ____ day of
_____________, 19__, by and between Myo Diagnostics, Inc., a California
corporation (the "COMPANY"), and _________________________________
("INDEMNITEE").
R E C I T A L S
A. The Company and Indemnitee recognize that the vagaries of public
policy and the interpretation of ambiguous statutes, regulations and court
opinions are too uncertain to provide the Company's officers, directors,
employees and other agents with adequate or reliable advance knowledge or
guidance with respect to the legal risks and potential liabilities to which they
may become personally exposed as a result of performing their duties in good
faith for the Company.
B. The Company and Indemnitee recognize that the cost of defending
against lawsuits resulting from the performance of their duties in good faith
for the Company, whether or not meritorious, is typically beyond the financial
resources of most officers, directors, employees and other agents of the
Company.
C. The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting officers and directors to
expensive litigation risk at the same time that the availability and coverage of
liability insurance has been severely limited.
D. The Company and the Indemnitee recognize that the legal risks and
potential liabilities, and the very threat thereof, associated with lawsuits
filed against the officers, directors, employees and other agents of the
Company, and the resultant substantial time, expense, harassment, ridicule,
abuse and anxiety spent and endured in defending against such lawsuits bears no
reasonable or logical relationship to the amount of compensation received by the
Company's officers and directors, and thus poses a significant deterrent to and
results in increased reluctance on the part of experienced and capable
individuals to serve as officers or directors of the Company.
E. In order to induce and encourage highly experienced and capable
persons such as Indemnitee to serve as officers and/or directors of the Company
and to otherwise promote the desirable end that such persons will resist what
they consider unjustifiable lawsuits and claims made against them in connection
with the good faith performance of their duties to the Company, secure in the
knowledge that certain expenses, costs and liabilities incurred by them in their
defense of such litigation will be borne by the
Company and that they will receive the maximum protection against such risks and
liabilities as may be afforded by law, the Board of Directors of the Company
(the "BOARD") has determined, after due consideration and investigation of the
terms and provisions of this Agreement and the various other options available
to the Company and Indemnitee in lieu hereof, that the following Agreement is
not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and the Company's shareholders.
F. The Company desires to have Indemnitee serve or continue to serve as
an officer and/or director of the Company, as the case may be, free from undue
concern for unpredictable, inappropriate or unreasonable legal risks and
personal liabilities by reason of his acting in good faith in the performance of
his duty to the Company; and Indemnitee desires to serve or continue to serve as
an officer or director of the Company; provided, and on the express condition,
that he is furnished with the indemnity set forth hereinafter.
G. The Company and Indemnitee desire that the indemnification rights
provided by this Agreement shall be supplemental to, and shall not supersede or
replace, any indemnification rights which may be provided by other sources,
including without limitation any indemnification which may be provided by the
Company pursuant to its bylaws, by contract or by applicable law.
A G R E E M E N T
The Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, "ACTION") (other than
an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent (collectively,
"AGENT") of the Company, or any subsidiary of the Company, by reason of any
action or inaction on the part of Indemnitee while an Agent or by reason of the
fact that Indemnitee is or was serving at the request of the Company as an Agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) and other amounts actually and
reasonably incurred by Indemnitee in connection with such Action if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the
best interest of the Company or subsidiary (as applicable) and, with respect to
any criminal action or proceeding,
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had no reasonable cause to believe Indemnitee's conduct was unlawful. The
termination of any action by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in the best interest of the Company, or
with respect to any criminal action or proceeding, had reasonable cause to
believe that Indemnitee's conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed Action by or in the right of the
Company or any subsidiary of the Company to procure a judgment in its favor by
reason of the fact that Indemnitee is or was an Agent of the Company or any
subsidiary of the Company, by reason of any action or inaction on the part of
Indemnitee while an Agent, or by reason of the fact that Indemnitee is or was
serving at the request of the Company as an Agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement, in each case to the extent actually and reasonably incurred
by Indemnitee in connection with the defense or settlement of such action or
suit in such circumstances and to the extent that indemnity is not expressly
prohibited by Section 317 of the California General Corporation Law as to the
indemnification by a corporation of its agents: (i) if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in the best interests
of the Company and its shareholders; or (ii) to the extent that the action or
contemplated action seeks monetary damages for breach of Indemnitee's duties to
the Company and its shareholders, provided that no indemnification shall be made
for any acts or omissions or transactions for which a director may not be
relieved of liability pursuant to the exception to Section 204(a)(10) of the
California General Corporation Law. For purposes of this Section 1(b),
indemnification shall include, to the extent not prohibited by law,
indemnification against all judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with such Action.
(c) MANDATORY PAYMENT OF EXPENSES. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any Action referred to
in subsection (a) or (b) of this Section 1 or the defense of any claim, issue or
matter therein, Indemnitee shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
therewith.
2. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) ADVANCEMENT OF EXPENSES. The Company shall advance all
reasonable expenses actually incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any Action referenced in
Section 1 hereof (but not amounts actually
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paid in settlement of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby.
(b) NOTICE TO COMPANY BY INDEMNITEE. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which such indemnification will or could be
sought under this Agreement. Notice to the Company shall be directed to the
Chief Executive Officer of the Company at the executive offices of the Company.
In addition, Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within Indemnitee's power.
(c) PROCEDURE. Any indemnification and advances provided for in
Section 1 and this Section 2 shall be made no later than 45 days after receipt
of the written request of Indemnitee. If a claim under this Agreement is not
paid in full by the Company within 45 days after a written request for payment
therefor has first 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. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
Action in advance of its final disposition) that Indemnitee has not met the
standards of conduct which make it permissible under the applicable law for the
Company to indemnify Indemnitee, but the burden of proving such defense shall be
on the Company and Indemnitee shall be entitled to receive interim payments of
expenses pursuant to subsection (a) of this Section 2 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 intention of the parties that if the
Company contests Indemnitee's right to indemnification under this Agreement or
applicable law, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Company (including its
officers, Board, any committee or subgroup of its Board, independent legal
counsel or its shareholders) to have made a determination that indemnification
of Indemnitee is or is not proper in the circumstances because Indemnitee has or
has not met the applicable standard of conduct required by this Agreement or by
applicable law, nor an actual determination by the Company (including its
officers, Board, any committee or subgroup of its Board, independent legal
counsel or its shareholders) that Indemnitee has or has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice
of a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to
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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.
(e) SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 2(a) hereof to pay the expenses of any proceedings
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ separate counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
(f) EFFECT OF CHANGE IN LAW. Notwithstanding any other provision of
this Agreement, in the event of any change in any applicable law, statute or
rule which narrows the right of the Company to indemnify Indemnitee, such
change, to the extent not otherwise required by such law, statute or rule to be
applied to this Agreement, shall have no effect on this Agreement or the
parties' rights and obligations hereunder.
(g) NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its Bylaws, any agreement, any
vote of shareholders or disinterested directors, applicable law, or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding such office. The indemnification provided under this
Agreement shall continue as to Indemnitee from any action taken or not taken
while serving in an indemnified capacity even though he may have ceased to serve
in such capacity at the time of any action, suit or other covered proceeding.
3. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any
Action, but not, however, for the total amount thereof, the Company shall
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nevertheless indemnify Indemnitee for the portion of such expenses, judgements,
fines or penalties to which Indemnitee is entitled.
4. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal or state law, regulation or applicable public
policy may prohibit the Company from indemnifying Indemnitee under this
Agreement or otherwise. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
Securities and Exchange Commission to submit the question of indemnification to
a court in certain circumstances for a determination of the Company's right
under law or public policy to indemnify Indemnitee.
5. SEVERABILITY. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to law,
regulation or court order, to perform its obligations under this Agreement shall
be severable as provided in this Section 5. If this Agreement or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the
full extent permitted by any applicable portion of this entire Agreement that
shall not have been invalidated, and the balance of this Agreement not so
invalidated shall be enforceable in accordance with its terms.
6. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to Indemnitee with respect to Actions initiated or brought voluntarily by
Indemnitee and not by way of defense, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board has
approved the initiation or bringing of such suit;
(b) LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses
incurred by Indemnitee with respect to any Action initiated by Indemnitee to
enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceedings was not made in good faith or was frivolous; or
(c) NO DUPLICATION OF PAYMENTS. To make any payment in connection
with any claim made against Indemnitee to the extent Indemnitee has otherwise
received payment (under any insurance policy, the Articles of Incorporation or
Bylaws of the Company, contract or otherwise) of the amounts otherwise
indemnifiable hereunder. If the Company makes any indemnification payment to
Indemnitee in connection with any claim made against Indemnitee and Indemnitee
has already received or thereafter receives payments in connection with the same
claim, then Indemnitee shall reimburse the
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Company in an amount equal to the lesser of (i) the amount of the payment
otherwise received by Indemnitee, and (ii) the full amount of the
indemnification payment made by the Company.
7. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, references to the "COMPANY" shall
include any successor, resulting, or surviving corporation of the Company.
(b) For purposes of this Agreement, references to "FINES" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as an Agent of the Company or any subsidiary of the Company
which imposes duties on, or involves services by, such Agent with respect to an
employee benefit plan, its participants, or beneficiaries; and if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan,
Indemnitee shall be deemed to have acted in a manner "in the best interest of
the Company" as referred to in this Agreement.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
10. NOTICE. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee, on the date of such receipt, or (ii) if
mailed by domestic certified or registered mail with postage prepaid, on the
third business day after the date postmarked if addressed as provided for on the
signature page of this Agreement, unless sooner received, or as subsequently
modified by written notice.
11. ATTORNEYS' FEES. If any action or proceeding is brought to enforce or
interpret any provision of this Agreement, the prevailing party shall be
entitled to recover as an element of its costs, and not its damages, reasonable
attorneys' fees to be fixed by the court. The prevailing party is the party who
is entitled to recover the costs of its action or proceeding, whether or not
such action or proceeding proceeds to final judgment. A party not entitled to
recover its costs of suit may not recover attorneys' fees. No sum for
attorneys' fees shall be counted in calculating the amount of a judgment for
purposes of determining whether a party is entitled to recover its costs or
attorneys' fees.
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12. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consents to the jurisdiction of the court of the State of California
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agrees that any action instituted under this
Agreement shall be brought only in the state courts of the State of California,
or in Federal courts located in such State.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MYO DIAGNOSTICS, INC.
By:
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Its:
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AGREED TO AND ACCEPTED:
INDEMNITEE:
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(type name)
- -----------------------------
(signature)
- -----------------------------
- -----------------------------
(address)
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