INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered
into this February ___, 2009 between DIALYSIS CORPORATION OF AMERICA, a
Florida corporation (the "Company," which term includes all of its
subsidiaries or affiliated companies), and ______________________
("Indemnitee").
WITNESSETH THAT:
WHEREAS, the Company and Indemnitee recognize that, directors, officers,
and other persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself, the result of
which being highly competent persons have become reluctant to join, and if
already employed or affiliated, to continue to serve corporations as
directors, officers, or in other capacities unless they are provided with
adequate protection against inordinate risks of claims and actions against
them arising out of their service to and activities on behalf of the
corporation;
WHEREAS, the Company and Indemnitee recognize the consistently
increasing costs of liability insurance as well as the general reductions or
exceptions in the coverage of such insurance;
WHEREAS, the uncertainties relating to such insurance and to
indemnification can increase the difficulty of attracting and retaining such
persons;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that any resulting difficulty in attracting and retaining such
persons is detrimental to the best interests of the Company and its
stockholders and that the Company should act to assure such persons that
there will be increased certainty of such protection in the future;
WHEREAS, although the certificate of incorporation and bylaws, as
amended (the "Charter Documents") of the Company require indemnification of
the persons serving the Company pursuant to the Florida Business Corporation
Act ("FBCA"), the bylaws and the FBCA expressly provide that the
indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and
members of the Board, officers and other persons with respect to
indemnification; as a result the Company believes that it is reasonable,
prudent and necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, such persons to the fullest
extent permitted by applicable law so that they will serve or continue to
serve the Company free from undue concern that they will not be so
indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the
Company's Charter Documents and any resolutions adopted pursuant thereto, and
shall not be deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder;
WHEREAS, Indemnitee does not regard the protection available under the
Company's Charter Documents adequate in the present circumstances, and is not
willing to serve or continue
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to serve as an officer or director of the Company or other Enterprise (as
defined below) without adequate protection, and the Company desires
Indemnitee to serve and continue to serve in such capacity(ies); and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve or
continue to serve the Company in his or her designated capacity from and
after the date hereof and in consideration of the covenants contained herein,
the Company and the Indemnitee agree as follows:
1. Definitions. For purposes of this Agreement:
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(a) "Change in Control" shall mean any one of the following events to
occur after the date of this Agreement:
(i) Acquisition of Stock by Third Party. Any Person (as defined
below) or Persons acting as a group that is or becomes the Beneficial Owner
(as defined below), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power
of the Company's then outstanding securities;
(ii) Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction
described in subsections (i),(iii) or (iv)) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds 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
least a majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company,
which are outstanding immediately prior to such merger or consolidation,
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation and with the power
to elect at least a majority of the board of directors or other governing
body of such surviving entity;
(iv) Liquidation. The approval by the stockholders of the Company
of a complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; and
(v) Other Events. There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar schedule or
form) promulgated under the Exchange
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Act (as defined below), whether or not the Company is then subject to such
reporting requirement.
(b) "Beneficial Owner" shall have the meaning given to such term in Rule
13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall
exclude any Person otherwise becoming a Beneficial Owner by reason of the
stockholders of the Company approving a merger of the Company with another
entity.
(c) "Corporate Status" describes the status of a person who is or was a
director, officer, employee or agent of the Company or is or was a director,
officer, employee or agent of any other Enterprise (as defined below).
(d) "Disinterested Director" means a director of the Company who is not
and was not a party to the Proceeding (as defined below) in respect of which
indemnification is sought by Indemnitee.
(e) "Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
that Indemnitee is or was serving at the express written request of the
Company as a director, officer, employee or agent.
(f) "Evaluation Date" shall mean, as to any Indemnification Request (as
defined in Section 9(a)), the date that is forty-five (45) calendar days
after the date of receipt by the Company of such Indemnification Request
provided, however, that such 45-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the person(s) making
such determination with respect to entitlement to indemnification in good
faith requires such additional time to obtain or evaluate documentation
and/or information relating thereto.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Expenses" shall include all reasonable attorneys' fees, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing to
be a witness in a Proceeding, or responding to, or objecting to, a request to
provide discovery in any Proceeding. Expenses also shall include Expenses
incurred in connection with any appeal resulting from any Proceeding and any
federal, state, local or foreign taxes imposed on the Indemnitee as a result
of the actual or deemed receipt of any payments under this Agreement,
including without limitation the premium, security for, and other costs
relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent. Expenses, however, shall not include amounts paid in settlement
by Indemnitee or the amount of judgments, penalties or fines against
Indemnitee.
(i) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is,
nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party (other than with
respect to other indemnitees under similar indemnification agreements), or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term
"Independent Counsel" shall not include any person
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who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of
or relating to this Agreement or its engagement pursuant hereto.
(j) "Person" shall mean any individual, corporation, company, general or
limited partnership, limited liability company, joint venture, trust, or
other entity; provided, however, Person shall exclude (i) the Company, (ii)
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company, and (iii) any corporation, partnership, joint venture,
trust, employment benefit plan or other enterprise owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(k) "Proceeding" includes any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding, whether brought by or in the right of the Company or otherwise
and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of
Indemnitee's Corporate Status, by reason of any action taken by Indemnitee or
of any inaction on Indemnitee's part during Indemnitee's Corporate Status, or
by reason of Indemnitee's Corporate Status serving another Enterprise; in
each case whether or not Indemnitee is acting or serving in any such capacity
at the time any liability or Expense is incurred for which indemnification,
including advancement of Expenses can be provided under this Agreement.
(l) "Statute" means Section 607.0850 of the FBCA or any successor
provisions(s) thereto.
2. Services to the Company. Indemnitee will serve or continue to serve in
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Indemnitee's capacity as a(n) _________________ [insert Indemnitee's
Corporate Status] of the Company for so long as Indemnitee is duly elected,
appointed or otherwise has an agreement to so serve or until Indemnitee
tenders Indemnitee's resignation, Indemnitee's term of service or agreement
expires, or Indemnitee is otherwise terminated by the Company.
3. Indemnification of Indemnitee. The Company hereby agrees to hold harmless
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and indemnify Indemnitee and, as part of such indemnification advance
Expenses to Indemnitee, as provided in this Agreement and to the fullest
extent permitted by applicable law in effect on the date hereof, and as such
may be amended from time to time. In furtherance of the foregoing
indemnification, and without limiting the generality thereof:
(a) Third-Party Proceedings. Indemnitee shall be entitled to the rights
of indemnification provided in this Section 3(a) if, by reason of
Indemnitee's Corporate Status, the Indemnitee was or is, or is threatened to
be made, a party to or participant in any Proceeding other than as provided
in Section 3(b). Pursuant to this Section 3(a), Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred, as well as
any judgments, penalties, fines (including an excise tax assessed with
respect to any employee benefit plan) and amounts paid in settlement which
were incurred by Indemnitee, or on Indemnitee's behalf, in
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connection with such Proceeding or any matter therein, or appeal thereof, if
the Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in, or not opposed to, the best interests of the Company or
other Enterprise, and with respect to any criminal Proceeding, had no
reasonable cause to believe the Indemnitee's conduct was unlawful.
(b) Derivative Proceedings.
(i) Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3(b) if, by reason of Indemnitee's Corporate Status,
the Indemnitee was or is, or is threatened to be made, a party to or
participant in any Proceeding brought by or in the right of the Company to
procure a judgment in its favor. Pursuant to this Section 3(b), Indemnitee
shall be indemnified against all Expenses and, subject to the provisions of
subparagraph (ii) below, amounts paid in settlement not exceeding, in the
judgment of the Board, the estimated Expense of litigating the Proceeding to
conclusion, actually and reasonably incurred by the Indemnitee, or on the
Indemnitee's behalf, in connection with the defense or settlement of such
Proceeding or any matter therein or appeal thereof. The indemnification
provided for hereby shall be authorized if the Indemnitee acted in good faith
and in a manner the Indemnitee reasonably believed to be in, or not opposed
to, the best interests of the Company. If applicable law so provides, no
indemnification under this Section 3(b) shall be made in respect of any
claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable unless, and only to the extent that the court in which the Proceeding
was brought, or any other court of competent jurisdiction, shall determine
upon application by Indemnitee that, despite the adjudication of liability
but in view of all the circumstances of the case, the Indemnitee is fairly
and reasonably entitled to indemnification.
(ii) Indemnification for amounts paid in settlement of the
Proceeding noted in paragraph (i) above shall not exceed, in the judgment of
the Board, the estimated Expense of litigating the Proceeding to conclusion;
provided however that to the extent that Indemnitee is not satisfied with the
amount estimated by the Board, Indemnitee may retain, at Indemnitee's own
expense, an independent consultant/agent to assess and provide an amount of
the estimated Expense of litigating the Proceeding to conclusion. Indemnitee
shall present such independent analyses to the Board and to the extent of any
discrepancy in the amounts estimated between the Board and the Indemnitee,
and further to the extent that the Indemnitee and Board cannot resolve the
differences between them, the parties agree to submit the matter to binding
arbitration or mediation in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in or about the county of Cumberland,
Pennsylvania. The costs associated with any arbitration or mediation shall
be borne entirely by the Company.
(iii) To the extent indemnification is not provided to Indemnitee
under this Section 3(b) because Indemnitee was adjudged to be liable, and
applicable law does not otherwise provide for indemnification, and provided
further that the court in which the Proceeding was brought, or any other
court of competent jurisdiction, has not made any prior determination that
indemnification is available, Indemnitee may apply to the court in which the
Proceeding was brought, or to any other court of competent jurisdiction, for
a determination that notwithstanding the adjudication of Indemnitee as liable
in the Proceeding, Indemnitee is entitled to indemnification in view of the
circumstances of the Proceeding. To the extent that Indemnitee is successful
in obtaining a finding by the court that Indemnitee is entitled to
indemnification irrespective of the adjudication of liability, the Company
hereby agrees to reimburse Indemnitee
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for all reasonable Expenses of Indemnitee incurred by Indemnitee in
connection with such application for indemnification. The Company further
agrees to stay any claim or demand for return of any advanced Expenses to
Indemnitee in connection with the Proceeding during the pendency of
Indemnitee's application to the court for indemnification per this paragraph
(iii). A finding by the court in such case that Indemnitee is entitled to
retain any advanced Expenses per this Agreement shall be considered as a
determination by such court that Indemnitee was entitled to indemnification
irrespective of an adjudication of liability and in such case the Company
shall be responsible for reimbursing Indemnitee for the Expense of such
application.
(c) Indemnitee Wholly or Partly Successful on the Merits.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of Indemnitee's Corporate Status, a party to and is
successful on the merits or otherwise, in defense of any Proceeding referred
to in Section 3(a) or (b) above, Indemnitee shall be indemnified to the
maximum extent permitted by law, as such may be amended from time to time,
against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection therewith. If Indemnitee 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 Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with each successfully resolved claim, issue or matter. The
Company acknowledges that a settlement or other disposition of a Proceeding
referred to in Sections 3(a) or (b) above short of final judgment, including,
without limitation, dismissal of the Proceeding or a claim, issue or matter
therein as against Indemnitee, with or without prejudice, may be deemed an
otherwise successful defense of such Proceeding or claim, issue or matter
therein. In the event that any Proceeding referred to in Sections 3(a) or
(b) above to which Indemnitee is a party, or any claim, issue or matter
therein, is resolved in any manner other than by adverse judgment against
Indemnitee, it shall be presumed that Indemnitee has been successful on the
merits or otherwise in such Proceeding or the particular claim, issue or
matter therein. Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing
evidence.
4. Termination of Proceeding Non-conclusive. The termination of any
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Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
5. No Employment Rights. Nothing contained in this Agreement is intended to
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create in Indemnitee any right to continued employment or to continue in the
position of Indemnitee's Corporate Status.
6. Additional Indemnification. Notwithstanding any other provision of this
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Agreement, the Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Charter Documents or by statute. In the event of any change,
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after the date of this Agreement, in any applicable law, statute or rule
which expands the right of a Florida corporation, partnership, joint venture,
trust, employment benefit plan or other enterprise to indemnify a member of
its board of directors, board of trustees, or similar board, an officer, an
employee or an agent, such changes shall be, in and of itself, within the
purview of the Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Florida corporation, partnership, joint venture,
trust, employment benefit plan or other enterprise to indemnify a member of
its board of directors, board of trustees, or similar board, an officer, an
employee or an agent, such changes, 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.
7. Indemnification for Expenses of a Witness. Notwithstanding any other
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provision of this Agreement, to the extent that Indemnitee is, by reason of
his Corporate Status, a witness, or is made (or asked to) respond to
discovery requests, in any Proceeding to which Indemnitee is not a party,
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.
8. Advancement of Expenses. Notwithstanding any other provision of this
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Agreement, the Company shall, prior to the disposition of such Proceeding,
advance all reasonable Expenses incurred by or on behalf of Indemnitee in
defending any civil or criminal Proceeding by reason of Indemnitee's
Corporate Status within fifteen (15) days after the receipt by the Company of
a written statement or statements from Indemnitee requesting such advance or
advances from time to time, provided that such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall be
accompanied by a written undertaking by or on behalf of Indemnitee to repay
any and all of such Expenses advanced if it shall ultimately be determined
that Indemnitee is not entitled to be indemnified against such Expenses, or
Indemnitee is adjudged liable in a Proceeding set forth in Section 3(b) above
and Indemnitee's subsequent application to a court of competent jurisdiction
for indemnification notwithstanding such judgment, has been denied by such
court. Any advances and undertakings to repay pursuant to this Section 8
shall be unsecured and interest free.
9. Procedures and Presumptions for Determination of Entitlement to
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Indemnification. It is the intent of this Agreement to secure for Indemnitee
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rights of indemnity that are at least as favorable as may be permitted under
the FBCA and public policy of the State of Florida. Accordingly, the parties
agree that the following procedures and presumptions shall apply with respect
to the determination that indemnification of the Indemnitee pursuant to this
Agreement is proper under the circumstances because the Indemnitee has met
the standards of conduct provided in this Agreement.
(a) To obtain indemnification under this Agreement, Indemnitee shall
timely submit to the Company, to its corporate Secretary, a written request
("Indemnification Request"), including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly
upon receipt of such Indemnification Request, advise the Board in writing
that Indemnitee has requested indemnification.
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(b) Provided that payment of indemnification by the Company in a
particular Proceeding has not already been determined by a court of competent
jurisdiction, upon the Indemnification Request pursuant to the first sentence
of Section 9(a) hereof, a determination with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (1) by the Board by
the majority vote of a quorum consisting of disinterested directors; and if
no such quorum exists, then (2) by the majority vote of a committee of the
Board consisting of not less than two disinterested directors which has been
duly designated by the Board (directors who are parties to the Proceeding at
hand having the right to participate in the designation of such committee);
and if no such committee is able to be designated under the circumstances,
then (3) by either of (i) Independent Counsel selected by a majority vote of
the full Board (wherein directors who are parties to the Proceeding at hand
may participate in such vote), or (ii) by a majority vote of a quorum of the
Company's disinterested shareholder's (if such quorum is obtainable, and if
not obtainable because of an interest in the Proceeding at hand, then a
majority vote of the shareholders who are not parties to the Proceeding).
The above notwithstanding, in the event of a Change of Control the
determination of entitlement to indemnification for Indemnitee shall be made
solely by Independent Counsel in accordance with the procedures set forth
below in subsection (c). For purposes hereof, disinterested directors are
those members of the Board who are not parties to the Proceeding in respect
of which indemnification is sought by Indemnitee.
(c) If the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 9(b) hereof, the Independent
Counsel shall be selected as provided in this Section 9(c). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board as provided in Section 9(b)(3), and the Company shall give written
notice to the Indemnitee advising him of the identity of the Independent
Counsel so selected within fifteen (15) days of its receipt of the
Indemnification Request from the Indemnitee. If a Change of Control shall
have occurred, the Independent Counsel shall be selected by Indemnitee
(unless the Indemnitee shall request that such selection be made by the then
existing Board, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected at the time the Indemnitee
provides Indemnitee's Indemnification Request. In either event, the party
receiving such written notice of selection may, within ten (10) days after
such written notice shall have been given, deliver to the notifying party a
written objection to such selection; provided, however, that such objection
may be asserted only on the grounds that the Independent Counsel so selected
does not meet the requirements of "Independent Counsel" as defined in
Sections 1(i) and 9 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and
timely objection, the person so selected shall act as Independent Counsel.
If a written objection is made and substantiated, the Independent Counsel
selected may not serve as Independent Counsel unless and until such objection
is withdrawn or a court has determined that such objection is without merit.
Either the Company or Indemnitee may petition a court of competent
jurisdiction for resolution of any objection which shall have been made by
the Indemnitee or the Company to the other's selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person selected by the
court or by such other person as the court shall designate, and the person
with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under this Section 9. The Company
shall pay any and all reasonable fees and expenses of Independent Counsel
incurred by such Independent Counsel in connection with acting pursuant to
this Section 9, and the Company shall pay all reasonable fees and expenses
incident to the
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procedures of this Section 9(c), regardless of the manner in which such
Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to
indemnification hereunder, the person(s) making such determination shall
review the Indemnification Request and related materials and endeavor to
determine whether the Indemnitee is entitled to indemnification under this
Agreement with the respect to the matters described therein. As of the
Evaluation Date, unless otherwise delayed by virtue of disagreement on the
appointment of Independent Counsel (in which case, the Evaluation Date shall
be delayed until the applicable period of time after such Independent Counsel
has been appointed), and unless the person(s) making such determination has
determined that the Indemnitee is not entitled to indemnification under this
Agreement with respect to the matters described in such Indemnification
Request, there shall be created the presumption that Indemnitee is entitled
to indemnification under this Agreement and the requisite determination of
entitlement to indemnification shall be deemed to have been made, in which
case Indemnitee shall be entitled to such indemnification absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement in connection with the
Indemnification Request not materially misleading, or (ii) a prohibition of
such indemnification under this Agreement or applicable law; provided,
further, that the foregoing provisions of this Section 9(d) shall not apply
if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 9(b) of this Agreement. Such presumption
shall continue, and indemnification shall be provided under this Agreement
unless and until such time as the person(s) making such determination shall
reasonably determine that the Indemnitee is not entitled to indemnification
under this Agreement. Subject to applicable law, a determination by the
applicable person(s) that the Indemnitee is not entitled to indemnification
under this Agreement shall be given effect under this Agreement only to the
extent such determination is made in good faith and is based upon clear and
convincing evidence.
(e) In furtherance of this Section 9 regarding the determination of the
propriety of indemnification, it shall in any event be presumed that
Indemnitee has at all times acted in good faith and in a manner Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to a criminal action or proceeding had no
reasonable cause to believe that Indemnitee's conduct was unlawful. Anyone
seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.
(f) Indemnitee shall cooperate with the person(s) charged with making
such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person(s) upon reasonable
advance request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. Any Independent
Counsel, member of the Board or stockholder of the Company shall act
reasonably and in good faith in making a determination regarding the
Indemnitee's entitlement to indemnification under this Agreement. Any
Expenses incurred by Indemnitee in so cooperating with the person(s) making
such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
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10. Remedies of Indemnitee.
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(a) In the event that (i) a determination is made pursuant to Section 9
hereof that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 8 of this Agreement, (iii) no determination of entitlement to
indemnification is made pursuant to Section 9(d) of this Agreement within 75
days after receipt by the Company of the Indemnification Request, or (iv)
payment of indemnification is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification or
such determination is deemed to have been made pursuant to Section 9 of this
Agreement, Indemnitee shall be entitled to petition the court in which the
Proceeding is or was brought or such other court of competent jurisdiction,
for an adjudication of Indemnitee's entitlement to such indemnification or
advancement of Expenses. Indemnitee agrees that Indemnitee shall commence
any such action seeking an adjudication within 180 days following the date on
which Indemnitee first has the right to commence such proceeding pursuant to
this Section 10(a). The Company shall not interfere with, prevent or oppose
the Indemnitee's timely commencement of such action. Upon such timely
commencement of an action by Indemnitee, and provided that the court in
question has all requisite jurisdiction over the parties and subject matter,
said court shall have the exclusive authority to make such determination
unless and until the court dismisses or otherwise terminates such action
without having made a decision. Notwithstanding the above, alternatively,
the Indemnitee, at Indemnitee's option, may seek an award for entitlement to
such indemnification in arbitration to be conducted by a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association in or about the county of Cumberland, Pennsylvania.
(b) The court or arbitrator shall make its independent determination
pursuant to Section 607.0850(9) of the FBCA or successor Statute or rule, as
the same may be subsequently amended; provided, that there shall exist a
rebuttable presumption that the Indemnitee is entitled to indemnification
under this Agreement and the burden of rebutting this presumption by clear
and convincing evidence shall be on the Company or such other party
challenging such indemnification. Neither the failure of the Board or such
other person(s) to have made a determination prior to the commencement of any
action by Indemnitee pursuant to this Section 10 that indemnification is
proper in the circumstances because Indemnitee has met the applicable
standard of conduct, shall (i) constitute a defense to the action brought by
Indemnitee hereunder, (ii) create a presumption that Indemnitee is not
entitled to indemnification under this Agreement, or (iii) otherwise alter
the presumption in favor of the Indemnitee referred to in the preceding
sentence of this subsection. In the event that a determination shall have
been made pursuant to Section 9(b) of this Agreement that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 10 shall be conducted in all respects as a de novo
trial or arbitration on the merits, and the Indemnitee shall not be
prejudiced by reason of that adverse determination.
(c) If the court or arbitrator determines that the Indemnitee is
entitled to be indemnified for any liabilities (other than Expenses) and/or
Expenses, or to receive the advancement of Expenses, in any case pursuant to
this Agreement, unless otherwise ordered by the court or arbitrator, the
Company shall pay such liabilities and/or Expenses (net of any Expenses, if
any previously advanced to the Indemnitee under Section 8 above), within ten
(10) business days of the rendering of such determination by the court or
arbitrator.
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(d) The Indemnitee shall pay all Expenses incurred by Indemnitee in
connection with Indemnitee's seeking a judicial adjudication or arbitration
under this Section 10 of Indemnitee's rights under, or to recover damages for
breach of, this Agreement, or to recover under any directors' and officers'
liability insurance policies that may be maintained by the Company, unless it
shall be ultimately determined by the court or arbitrator that Indemnitee is
entitled, in whole or in part, to be indemnified by, or to receive advances
of Expenses from, the Company, as authorized by this Agreement, in which case
the Expenses incurred by Indemnitee in seeking his remedies under this
Section 10 shall be paid or reimbursed by the Company in addition to the
monies otherwise due Indemnitee under this Agreement. All Expenses incurred
by Indemnitee in connection with any subsequent appeal by Indemnitee of any
judicial or arbitration determination provided for in this subsection (d)
shall be paid by Indemnitee regardless of the disposition of such appeal.
(e) The Company shall be precluded from asserting in any judicial or
arbitration proceeding commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or arbitration that the
Company is bound by all the provisions of this Agreement.
(f) The parties agree and acknowledge that in the event of a breach by
the Company of its obligations under this Agreement, or a breach of any other
material provision of this Agreement, damages at law may be an insufficient
remedy to the Indemnitee. Accordingly the parties agree that, in addition to
any other remedies or rights that may be available to the Indemnitee, the
Indemnitee shall also be entitled, upon application to a court of competent
jurisdiction, to obtain temporary or permanent injunctions to compel specific
performance of the obligation of the Company under this Agreement.
11. Non-Exclusivity. The rights of indemnification as provided by this
---------------
Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Company's
Charter Documents, any agreement, or a vote of stockholders or disinterested
directors or otherwise, of the Company. No amendment, alteration or repeal
of this Agreement or of any provision hereof shall limit or restrict any
right of Indemnitee under this Agreement in respect of any Proceeding to
which Indemnitee is or becomes a party which arises prior to such amendment,
alteration or repeal or which is based upon action taken or omitted by
Indemnitee in Indemnitee's Corporate Status prior to the amendment,
alteration or repeal of this Agreement. No right or remedy herein conferred
is intended to be exclusive of any other right or remedy, and every other
right and remedy shall be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.
12. Insurance; Subrogation.
----------------------
(a) The Company may purchase and maintain an insurance policy or
policies providing liability insurance coverage for Indemnitee against any
liability or Expense asserted or incurred by or on behalf of Indemnitee in
Indemnitee's capacity as a director, officer, employee or agent of the
Company or of any other Enterprise, or arising out of Indemnitee's Corporate
Status, whether or not the Company would have power to indemnify Indemnitee
against such liability or advance Expenses under the provisions of this
Agreement or under the
11
Statute as it may then be in effect. Except as expressly provided herein,
the purchase and maintenance of such insurance shall not in any way limit or
affect the rights and obligations of the Company and the Indemnitee under
this Agreement and the execution and delivery of this Agreement by the
Company and Indemnitee shall not in any way be construed to limit or affect
the rights and obligations of the Company and of the other party or parties
thereto under any such policy or agreement of insurance.
(b) If the Indemnitee shall receive payment from any insurance carrier
or from any other source other than the Company in connection with any
Proceeding in respect of indemnified amounts after payment on account of all
or part of such indemnified amounts have been made by the Company pursuant to
this Agreement, the Indemnitee shall promptly reimburse the Company for the
amount, if any, by which the sum of such payment by such insurance carrier or
other payment source and the payments by the Company hereunder exceed such
indemnified amounts, and if before payment on account of all or part of such
indemnified amounts have been made by the Company pursuant to this Agreement,
the payments received by Indemnitee from any insurance carrier or other
source shall be treated as a set-off or reduction of the actual amounts
required to be paid by the Company in respect of such indemnified amounts.
The above notwithstanding, portions, if any, of insurance proceeds that are
required to be reimbursed to the insurance carrier under the terms of the
insurance policy, such as co-insurance, retention or deductible amounts,
shall not be deemed as payments to the Indemnitee hereunder by such insurance
carrier.
(c) Upon payment of indemnified amounts under this Agreement, the
Company shall be subrogated to the Indemnitee's rights against any insurance
carrier in respect of such indemnified amounts and the Indemnitee shall
execute and deliver any and all instruments and documents, and perform any
and all other acts or deeds that the Company deems necessary or advisable to
secure such rights. The Indemnitee shall do nothing to prejudice such rights
of recovery or subrogation.
(d) The Company's obligation to indemnify or advance Expenses hereunder
to Indemnitee who is or was serving at the request of the Company as a
director, officer, employee or agent of any other Enterprise shall be reduced
by any amount Indemnitee has actually received as indemnification or
advancement of Expenses from such other Enterprise.
13. Exception to Right of Indemnification. Notwithstanding any provision in
-------------------------------------
this Agreement to the contrary, the Indemnitee shall not be entitled to any
indemnification or advancement of Expenses for indemnification, and the
Company shall not be obligated to and shall not indemnify, contribute or
advance Expenses to the Indemnitee:
(a) with respect to any Proceeding for an accounting of profits made
from the purchase and sale (or sale and purchase) by Indemnitee of securities
of the Company within the meaning of Section 16(b) of the Exchange Act or
similar provisions of state statutory law or common law;
(b) in connection with any Proceeding (or any part of any Proceeding)
initiated or brought voluntarily by Indemnitee and not by way of defense,
including any Proceeding (or any part of any Proceeding) initiated by
Indemnitee against the Company or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of
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any Proceeding) prior to its initiation or (ii) the Proceeding is brought to
establish or enforce a right to indemnification, contribution or an advance
of Expenses under Section 10 hereof, the Statute, the Charter Documents, or
other applicable law then in effect; or
(c) if a judgment or other final adjudication establishes that
Indemnitee's actions or omissions to act were material to the Proceeding so
adjudicated and constitute: (i) a violation of criminal law, except where the
Indemnitee had reasonable cause to believe Indemnitee's conduct was lawful or
had no reasonable cause to believe Indemnitee's conduct was unlawful; (ii) a
transaction from which the Indemnitee derived an improper personal benefit;
(iii) a violation of Section 607.0834 (unlawful distributions) of the FBCA;
or (iv) willful misconduct or a conscious disregard for the best interests of
the Company in a Proceeding by or in the right of the Company to procure a
judgment in its favor or in a Proceeding by or in the right of a shareholder.
14. Contribution.
------------
(a) Subject to this Section 14 and the provisions of Section 13 above,
in the event that indemnification provided herein is not available for any
reason whatsoever, the Company in lieu of indemnifying the Indemnitee shall
contribute to the amount incurred by or on behalf of Indemnitee for
liabilities and/or for reasonable Expenses in connection with any Proceeding
in such proportion as is deemed fair and reasonable by the Board or other
designated authority in light of all of the circumstances of such Proceeding
in order to reflect (i) the relative benefits received by the Company and the
Indemnitee as a result of the events or transactions giving rise to such
Proceeding; and/or (ii) the relative fault of the Company (and it other
executives, employees and agents) and the Indemnitee in connection with such
events or transactions.
(b) The relative fault of the Company (and its other executives,
employees and agents) on the one hand, and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent the circumstances resulting in the liabilities and Expenses as
well as the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability is primary
or secondary and the degree to which their conduct is active or passive.
(c) The Company's payment of, and the Indemnitee's right to,
contribution under this Section 14 shall be made and determined in accordance
with, pursuant to and in the same manner as, the provisions in Section 9
hereof as applicable, relating to the Company's payment of, and the
Indemnitee's right to, indemnification under this Agreement.
15. Duration of Agreement. All agreements and obligations of the Company
---------------------
contained herein shall continue during the period Indemnitee is an officer,
director, employee or agent of the Company (or is or was serving at the
request of the Company as a director, officer, employee or agent of another
Enterprise) and shall continue thereafter so long as Indemnitee shall be
subject to any Proceeding by reason of his Corporate Status, whether or not
he is acting or serving in any such capacity at the time any liability or
Expense is incurred for which indemnification can be provided under this
Agreement.
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16. Consideration; Entire Agreement.
-------------------------------
(a) The Company expressly confirms and agrees that it has entered into
this Agreement and assumes the obligations imposed on it hereby in order to
induce Indemnitee to serve or continue to serve as a(n) _________________
[insert Indemnitee's Corporate Status] of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving or
continuing to serve as a(n) _________________ [insert Indemnitee's Corporate
Status] Director of the Company.
(b) 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.
17. Severability. The invalidity or unenforceability of any provision hereof
------------
shall in no way affect the validity or enforceability of any other provision.
Without limiting the generality of the foregoing, this Agreement is intended
to confer upon Indemnitee indemnification rights to the fullest extent
permitted by applicable law. In the event any provision hereof conflicts
with any applicable law to the effect that it restricts or narrows the
application of such law with respect to indemnification of Indemnitee, such
provision shall be deemed modified, consistent with the aforementioned
intent, to the extent necessary to resolve such conflict.
18. Modification and Waiver. No supplement, modification, termination 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 or not similar) nor shall such waiver constitute a
continuing waiver.
19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company
--------------------
in writing upon being served with or otherwise receiving any summons,
citation, subpoena, complaint, indictment, information or other document
relating to any Proceeding or matter which may be subject to indemnification
covered hereunder. The failure to so notify the Company shall not relieve
the Company of any obligation which it may have to Indemnitee under this
Agreement or otherwise unless and only to the extent that such failure or
delay materially prejudices the Company.
20. Notices. All notices and other communications given or made pursuant to
-------
this Agreement shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified, (b) when sent by
confirmed electronic mail or facsimile if sent during normal business hours
of the recipient, and if not so confirmed, then on the next business day, (c)
three (3) business days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) business day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall
be sent:
(a) To Indemnitee: at the address set forth below Indemnitee signature.
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(b) To Company: Dialysis Corporation of America
1302 Concourse Drive, Suite 204
Linthicum, MD 21090
Attention: Stephen W. Everett, President & CEO
cc: Company Counsel Jaffe & Falk, LLC
777 Terrace Avenue, Suite 503
Hasbrouck Heights, NJ 07604
Attention: Joshua M. Jaffe, Esq.
or to such other address as may have been furnished to Indemnitee by the
Company or to the Company by Indemnitee, as the case may be prior to the date
of the notice being sent.
21. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement. This Agreement may
also be executed and delivered by facsimile signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Headings. The headings of the paragraphs of this Agreement are inserted
--------
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
23. Governing Law. This Agreement and the legal relations among the parties
-------------
shall be governed by, and construed and enforced in accordance with, the laws
of the State of Florida applicable to contracts made and to be performed
therein, without regard to its conflict of laws rules.
24. Assignment; No Third Party Beneficiaries.
----------------------------------------
(a) Any claim, right, title, benefit, remedy, or interest of the
Indemnitee in, to or under or arising out of or in connection with this
Agreement is personal and may not be sold, assigned, transferred, pledged, or
hypothecated, but the provisions hereof shall survive the death, disability
or other incapacity of the Indemnitee or the termination of the Indemnitee's
services as a director, officer, employee or agent of the Company, or in any
other capacity as to which indemnification is available under this Agreement,
and shall inure to the benefit of the Indemnitee's heirs, devisees,
executors, administrators and other legal representatives. This Agreement
shall inure to the benefit of and shall be binding upon the successors in
interest and assigns of the Company, including any successor corporation
resulting from a merger, consolidation, recapitalization, reorganization,
sale of all or substantially all of the assets of the Company, or any other
transaction resulting in the successor corporation assuming the liabilities
of the Company under this Agreement (by operation of law or otherwise).
(b) This Agreement is not intended to benefit, and has not been entered
into for the benefit of, any third party, and other than as set forth in the
preceding paragraph as to heirs, devisees, assignees, executors,
administrators, other legal representatives and successors. Nothing in this
Agreement, whether expressed or implied, is intended or should be construed
to confer upon, or to grant to any person, except the Company and the
Indemnitee, and except as
15
provided in subparagraph (a) above, any claim, right, benefit or remedy under
or because of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
DIALYSIS CORPORATION OF AMERICA
By: ------------------------------------
Name:
Title:
INDEMNITEE
-----------------------------------------
Name:
Address:
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