EXHIBIT 10.20
INDEMNIFICATION
AGREEMENT
This INDEMNIFICATION AGREEMENT (this “Agreement”)
is made and entered into this
day of
,
20
(the “Effective Date”) by and between Digirad Corporation, a Delaware
corporation (the “Company”),
and (the
“Indemnitee”).
WHEREAS, the Company believes it is essential to
retain and attract qualified directors and officers;
WHEREAS, the Indemnitee is or intends to become a
director and/or officer of the Company;
WHEREAS, both the Company and the Indemnitee recognize
the increased risk of litigation and other claims being asserted against
directors and officers of public companies;
WHEREAS, the Company’s Restated Certificate of
Incorporation (the “Certificate of Incorporation”) and Restated Bylaws
(the “Bylaws”) require the Company to indemnify and advance expenses to
its directors and officers to the extent permitted by the DGCL (as hereinafter
defined);
WHEREAS, in recognition of the Indemnitee’s need for
(i) substantial protection against personal liability based on the
Indemnitee’s reliance on the Certificate of Incorporation and Bylaws,
(ii) an inducement to provide effective services to the Company as a
director and/or officer thereof, the Company wishes to provide for the
indemnification of the Indemnitee and to advance expenses to the Indemnitee to
the fullest extent permitted by law and as set forth in this Agreement, and, to
the extent insurance is maintained by the Company, to provide for the continued
coverage of the Indemnitee under the Company’s directors’ and officers’
liability insurance policies; and
WHEREAS, the Indemnitee (i) has been serving and
intends to continue serving as a director and/or officer of the Company in part
in reliance on the Certificate of Incorporation and Bylaws; or (ii) is relying upon the rights afforded under this
Agreement in accepting Indemnitee’s position as a director, officer or employee
of the Company;
NOW, THEREFORE, in consideration of the premises contained
herein and of the Indemnitee continuing to serve the Company directly or, at
its request, with another enterprise, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. Certain
Definitions.
(a) A
“Change in Control” shall, for purposes of this Agreement, be deemed to
have occurred if:
(i) any
“person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the “Exchange Act”), other than (a) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company; (b)
a corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company; or (c) any current beneficial stockholder or group, as defined by Rule
13d-5 of the
Exchange Act, including the heirs, assigns and successors thereof, of
beneficial ownership, within the meaning of Rule 13d-3 of the Exchange Act, of
securities possessing more than 50% of the total combined voting power of the
Company’s outstanding securities; hereafter becomes the “beneficial owner,” as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the total combined voting
power represented by the Company’s then outstanding Voting Securities;
(ii) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board and any new director whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds of the directors then in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company, in one transaction or a series of
transactions, of all or substantially all of the Company’s assets.
(b) “DGCL”
shall mean the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended or interpreted; provided, however, that in
the case of any such amendment or interpretation, only to the extent that such
amendment or interpretation permits the Company to provide broader
indemnification rights than were permitted prior thereto.
(c) “Expense”
shall mean attorneys’ fees and all other costs, expenses and obligations paid
or incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing for any of the foregoing,
any Proceeding relating to any Indemnifiable Event.
(d) “Indemnifiable
Event” shall mean any event or occurrence that takes place either prior to
or after the execution of this Agreement, related to the fact that the
Indemnitee is or was a director or officer of the Company, or is or was serving
at the request of the Company as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, or by
reason of anything done or not done by the Indemnitee in any such capacity.
(e) “Proceeding”
shall mean any threatened, pending or completed action, suit, investigation or
proceeding, and any appeal thereof, whether civil, criminal, administrative or
investigative and/or any inquiry or investigation, whether conducted by the
Company or any other party, that the Indemnitee in good faith believes might
lead to the institution of any such action.
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(f) “Reviewing
Party” shall mean any appropriate person or body consisting of a member or
members of the Company’s Board or any other person or body appointed by the
Board (including the special independent counsel referred to in Section 6)
who is not a party to the particular Proceeding with respect to which the
Indemnitee is seeking indemnification.
(g) “Voting
Securities” shall mean any securities of the Company which vote generally
in the election of directors.
2. Indemnification. In the event the Indemnitee was or
is a party to or is involved (as a party, witness, or otherwise) in any
Proceeding by reason of (or arising in part out of) an Indemnifiable Event,
whether the basis of the Proceeding is the Indemnitee’s alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer, the Company shall indemnify the Indemnitee to
the fullest extent permitted by the DGCL against any and all Expenses,
liability, and loss (including judgments, fines, ERISA excise taxes or
penalties, and amounts paid or to be paid in settlement, and any interest,
assessments, or other charges imposed thereon, and any federal, state, local,
or foreign taxes imposed on any director or officer as a result of the actual
or deemed receipt of any payments under this Agreement) (collectively, “Liabilities”)
reasonably incurred or suffered by such person in connection with such
Proceeding. The Company shall provide
indemnification pursuant to this Section 2 as soon as practicable, but in no
event later than 30 days after it receives written demand from the
Indemnitee. Notwithstanding anything in
this Agreement to the contrary and except as provided in Section 5 below,
the Indemnitee shall not be entitled to indemnification pursuant to this
Agreement (i) in connection with any Proceeding initiated by the Indemnitee
against the Company or any director or officer of the Company unless the
Company has joined in or consented to the initiation of such Proceeding or (ii)
on account of any suit in which judgment is rendered against the Indemnitee
pursuant to Section 16(b) of the Exchange Act for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company.
3. Advancement
of Expenses. The Company
shall advance Expenses to the Indemnitee within 30 business days of such
request (an “Expense Advance”); provided, however, that if required by
applicable corporate laws such Expenses shall be advanced only upon delivery to
the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it is ultimately determined that the Indemnitee is not entitled to be
indemnified by the Company; and provided further, that the Company shall make
such advances only to the extent permitted by law. Expenses incurred by the Indemnitee while not acting in his/her
capacity as a director or officer, including service with respect to employee
benefit plans, may be advanced upon such terms and conditions as the Board, in
its sole discretion, deems appropriate.
4. Review
Procedure for Indemnification. Notwithstanding
the foregoing, (i) the obligations of the Company under Sections 2
and 3 above shall be subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in which the special
independent counsel referred to in Section 6 hereof is involved) that the
Indemnitee would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant to
Section 3 above shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that the Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by the Indemnitee (who hereby agrees to reimburse the
Company) for all such
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amounts theretofore paid; provided, however, that if the Indemnitee has
commenced legal proceedings in a court of competent jurisdiction pursuant to
Section 5 below to secure a determination that the Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that the Indemnitee would not be permitted to be indemnified under applicable
law shall not be binding and the Indemnitee shall not be required to reimburse
the Company for any Expense Advance until a final judicial determination is
made with respect thereto (as to which all rights of appeal therefrom have been
exhausted or have lapsed). The Indemnitee’s
obligation to reimburse the Company for Expense Advances pursuant to this
Section 4 shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control,
the Reviewing Party shall be selected by the Board, and if there has been such
a Change in Control, other than a Change in Control which has been approved by
a majority of the Company’s Board who were directors immediately prior to such
Change in Control, the Reviewing Party shall be the special independent counsel
referred to in Section 6 hereof.
5. Enforcement
of Indemnification Rights.
If the Reviewing Party determines that the Indemnitee substantively
would not be permitted to be indemnified in whole or in part under applicable
law, or if the Indemnitee has not otherwise been paid in full pursuant to
Sections 2 and 3 above within 30 days after a written demand has been received
by the Company, the Indemnitee shall have the right to commence litigation in
any court in the State of Delaware having subject matter jurisdiction thereof
and in which venue is proper to recover the unpaid amount of the demand (an “Enforcement
Proceeding”) and, if successful in whole or in part, the Indemnitee shall
be entitled to be paid any and all Expenses in connection with such Enforcement
Proceeding. The Company hereby consents
to service of process for such Enforcement Proceeding and to appear in any such
Enforcement Proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding
on the Company and the Indemnitee.
6. Change in
Control. The Company agrees
that if there is a Change in Control of the Company, other than a Change in
Control which has been approved by a majority of the Company’s Board who were
directors immediately prior to such Change in Control, then with respect to all
matters thereafter arising concerning the rights of the Indemnitee to indemnity
payments and Expense Advances under this Agreement or any other agreement or
under applicable law or the Company’s Certificate of Incorporation or Bylaws
now or hereafter in effect relating to indemnification for Indemnifiable
Events, the Company shall seek legal advice only from special independent
counsel selected by the Indemnitee and approved by the Company, which approval
shall not be unreasonably withheld.
Such special independent counsel shall not have otherwise performed
services for the Company or the Indemnitee, other than in connection with such
matters, within the last five years.
Such independent counsel shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the Indemnitee in an
action to determine the Indemnitee’s rights under this Agreement. Such counsel, among other things, shall
render its written opinion to the Company and the Indemnitee as to whether and
to what extent the Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to
pay the reasonable fees of the special independent counsel referred to above
and to indemnify fully such counsel against any and all expenses (including
attorneys’ fees),
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claims, liabilities and damages arising out of or relating to this Agreement
or the engagement of special independent counsel pursuant to this Agreement.
7. Partial
Indemnity. If the Indemnitee
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses and Liabilities, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion thereof to which the Indemnitee is
entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any or all Proceedings
relating in whole or in part to an Indemnifiable Event or in defense of any
issue or matter therein, including dismissal without prejudice, the Indemnitee
shall be indemnified against all Expenses incurred in connection
therewith. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that the Indemnitee is not so entitled.
8. Non-exclusivity. The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under any statute,
provision of the Company’s Certificate of Incorporation or Bylaws, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that a change in
the DGCL permits greater indemnification by agreement than would be afforded
currently under the Company’s Certificate of Incorporation and Bylaws and this
Agreement, it is the intent of the parties hereto that the Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change.
9. Liability
Insurance. To the extent the
Company maintains an insurance policy or policies providing directors’ and
officers’ liability insurance, the Indemnitee shall be covered by such policy
or policies, in accordance with its or their terms, to the maximum extent of
the coverage available for any director or officer of the Company.
10. Settlement
of Claims. The Company shall
not be liable to indemnify the Indemnitee under this Agreement (a) for any
amounts paid in settlement of any action or claim effected without the
Company’s written consent, which consent shall not be unreasonably withheld; or
(b) for any judicial award if the Company was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action.
11. No
Presumption. For purposes of
this Agreement, to the fullest extent permitted by law, the termination of any
Proceeding, action, suit or claim, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that the Indemnitee did not meet
any particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by applicable law.
12. Period of
Limitations. No legal action
shall be brought and no cause of action shall be asserted by or on behalf of
the Company or any affiliate of the Company against the Indemnitee, the
Indemnitee’s spouse, heirs, executors or personal or legal representatives
after the expiration of two years from the date of accrual of such cause of
action, or such longer period as may be required by state law under the
circumstances, and any claim or cause of action of the
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Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.
13. Amendment of
this Agreement. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no
failure to exercise or any delay in exercising any right or remedy hereunder
shall constitute a waiver thereof.
14. Consent and
Waiver by Third Parties. If
the Indemnitee is or will become an officer of the Company, then the Indemnitee
hereby represents and warrants that he or she has obtained all waivers and/or
consents from third parties which are necessary for his or her employment with
the Company on the terms and conditions set forth herein and to execute and
perform this Agreement without being in conflict with any other agreement,
obligation or understanding with any such third party. The Indemnitee represents that he or she is
not bound by any agreement or any other existing or previous business
relationship which conflicts with, or may conflict with, the performance of his
or her obligations hereunder or prevent the full performance of his or her
duties and obligations hereunder.
15. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
16. No
Duplication of Payments. The
Company shall not be liable under this Agreement to make any payment in
connection with any claim made against Indemnitee to the extent the Indemnitee
has otherwise actually received payment (under any insurance policy, Bylaw,
vote, agreement or otherwise) of the amounts otherwise indemnifiable hereunder.
17. Binding
Effect. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives.
The Company shall require and cause any successor (whether direct or
indirect by purchase, merger, consolidation or otherwise) to all, substantially
all, or a substantial part, of the business and/or assets of the Company, by
written agreement in form and substance satisfactory to the Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement
shall continue in effect regardless of whether the Indemnitee continues to
serve as a director or officer of the Company or of any other enterprise at the
Company’s request.
18. Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or
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sentence) is held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void or otherwise unenforceable,
that is not itself invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
19. Governing
Law. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in such State
without giving effect to the principles of conflicts of laws.
20. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Notices. All notices, demands, and other
communications required or permitted hereunder shall be made in writing and
shall be deemed to have been duly given if delivered by hand, against receipt,
or mailed, postage prepaid, certified or registered mail, return receipt
requested, and addressed to the Company at:
Digirad Corporation
13950 Stowe Drive
Poway, CA 92064
Attention: Chief Executive Officer
and to the Indemnitee at:
Notice of change of address shall be effective only
when done in accordance with this Section.
All notices complying with this Section shall be deemed to have been
received on the date of delivery or on the third business day after mailing.
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INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement as of the day first set forth above.
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COMPANY:
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DIGIRAD
CORPORATION
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By:
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Name:
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Title:
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INDEMNITEE:
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Signature
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Print Name:
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[SIGNATURE PAGE TO
INDEMNIFICATION AGREEMENT]
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