Document:

EXHIBIT 10.3

EXECUTION COPY

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”) is made and entered into as of August 3, 2011 between HealthWarehouse.com, Inc., a Delaware corporation (the “Company”), and John Backus (“Indemnitee”).

 

Recitals

 

Whereas, highly competent persons have become more reluctant to serve corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

Whereas, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, 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 Company’s Bylaws (the “Bylaws”) and the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The Bylaws, the Certificate of Incorporation and the DGCL 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 of directors, officers and other persons with respect to indemnification;

 

Whereas, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

Whereas,  the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

Whereas,  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 Bylaws and the Certificate of Incorporation 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 Bylaws and the Certificate of Incorporation and the Company’s insurance as adequate in the present circumstances, and may not be willing to serve as a director without adequate protection, and the Company desires Indemnitee to serve in such capacity.  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 he be so indemnified; and

 

Whereas, Indemnitee has certain rights to indemnification and/or insurance provided by New Atlantic Venture Fund III, L.P., which Indemnitee and New Atlantic Venture Fund III, L.P. intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.

 

Agreement

 

Now, therefore, in consideration of Indemnitee’s agreement to serve as a director from and after the date hereof, the parties hereto agree as follows:

 

1.           Indemnity of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, 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, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(b)           Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding 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; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

 

  

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(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he 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 him or on his 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 him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

(d)           Indemnification of Appointing Stockholder.  If (i) Indemnitee is or was affiliated with one or more venture capital funds or similar investor that has invested in the Company (an “Appointing Stockholder”), and (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding, and (iii) the Appointing Stockholder's involvement in the Proceeding (A) arises primarily out of, or relates to, any action taken by the Company that was approved by the Company’s Board and (B) arises out of facts or circumstances that are the same or substantially similar to the facts and circumstances that form the basis of claims that have been, could have been or could be brought against the Indemnitee in a Proceeding, regardless of whether the legal basis of the claims against the Indemnitee and the Appointing Stockholder are the same or similar, then the Appointing Stockholder shall be entitled to all of the indemnification rights and remedies under this Agreement pursuant to this Agreement as if the Appointing Stockholder were the Indemnitee.

 

2.           Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Section 6 and Section 7 hereof) to be unlawful.

 

3.           Contribution.

 

(a)           Whether or not the indemnification provided in Section 1 and Section 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

  

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(b)           Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the applicable law may require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, 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 hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d)           To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

4.           Indemnification for Expenses of a Witness.  Notwithstanding any other 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, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

  

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5.           Advancement of Expenses.  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

 

6.           Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)           To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written 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 a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.  Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the board:  (1) by a majority vote of the disinterested directors, even though less than a quorum, (2) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if the disinterested directors so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company.  For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

 

  

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(c)           If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by the Board.  Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 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.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’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 Section 6(b) hereof.  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 Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(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 or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(e)           Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

  

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(f)           If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and 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 not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity 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; and provided, further, that the foregoing provisions of this Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board of Directors or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

 

(g)           Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity 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 of Directors 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 costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity 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.

 

(h)           The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(i)           The termination of any 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 he 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 his conduct was unlawful.

 

  

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7.           Remedies of Indemnitee.

 

(a)           In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) 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 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

(b)           In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

 

(c)           If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)           In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

 

(e)           The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.  The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

 

  

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(f)           Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

8.           Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.

 

(a)           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 Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders, a resolution of 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 action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under  the Certificate of Incorporation, the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  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.

 

(b)           To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, 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, officer, employee, agent or fiduciary under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to 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.

 

(c)           The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by New Atlantic Venture Fund III, L.P. and certain of its affiliates (collectively, the “Fund Indemnitors”).  The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii)  that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 8(c).

 

  

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(d)           Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(e)           Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(f)           Except as provided in paragraph (c) above, 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 corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

9.           Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

(a)           for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above; or

 

(b)           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 Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

 

  

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(c)           in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, 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 any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

10.           Duration of Agreement.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) 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.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

 

11.           Security.  To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

12.           Enforcement.

 

(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 as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or 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.

 

(c)           The Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting the Indemnitee's rights to receive advancement of expenses under this Agreement.

 

13.           Definitions.  For purposes of this Agreement:

 

(a)           “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

  

11

  

 

(b)           “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           “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, agent or fiduciary.

 

(d)           “Expenses” shall include all reasonable attorneys’ fees, retainers, 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, supersede as bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(e)           “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 matters concerning Indemnitee under this Agreement, or of 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 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 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.

 

(f)           “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 the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case 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; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

 

  

12

  

 

14.           Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Further, the invalidity or unenforceability of any provision hereof as to either Indemitee or Appointing Stockholder shall in no way affect the validity or enforceability of any provision hereof as to the other.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee and Appointing Stockholder indemnification rights to the fullest extent permitted by applicable laws.  In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

15.           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.

 

16.           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.

 

17.           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) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) 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 hereto.

 

	
  

	
(b)

	
To the Company at:

 

HealthWarehouse.com, Inc.

7107 Industrial Road

Florence, KY 41042

Attention: ` President

with a copy (which shall not constitute notice) to:

  

13

  

 

Kohnen & Patton LLP

PNC Center, Suite 800

201 E. Fifth Street

Cincinnati, OH 45202

Attention: Mark J. Zummo, Esq.

Facsimile No.:  (513) 381-5823

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.

 

18.           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.

 

19.           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.

 

20.           Governing Law and Consent to Jurisdiction.  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 Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

[Signature Page Follows]

 

  

14

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

 

	  	
COMPANY:

	  	  
	  	
HealthWarehouse.com, Inc.

	  	  	  
	  	
By:

	
/s/ Lalit Dhadphale

	  	
Name: Lalit Dhadphale

	  	
Title: Chief Executive Officer

	  	  	  
	  	
INDEMNITEE:

	  	  	  
	  	
 /s/ John Backus

	  	
John Backus

	  	  	  
	  	
Address:

	  	  	
11911 Freedom Drive

	  	  	
Suite 1080

	  	  	
Reston, VA 20190

	  	  	
Tel: 703.563.4101

	  	  	
Fax: 703.563.4111

 

[Signature Page to Indemnification Agreement]a6816701ex10_1.htm

Exhibit 10.1

 

 

 

__________________________________________

 

FIRST AMENDMENT TO

THIRD AMENDED AND RESTATED

 

MASTER LEASE AGREEMENT

 

__________________________________________

 

 

Among

 

THE LESSOR ENTITIES IDENTIFIED ON THE SIGNATURE PAGE HEREOF

 

THE LESSEE ENTITIES IDENTIFIED ON THE SIGNATURE PAGE HEREOF

 

Dated As Of

 

 

May 31, 2011

 

 

 

 

 

 

 

 

FIRST AMENDMENT TO

THIRD AMENDED AND RESTATED

MASTER LEASE AGREEMENT

THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “Amendment”), is made and entered into on this 31st day of May, 2011 (the “Effective Date”) by and among the lessor entities identified on the signature page hereof (collectively, the “Lessor,” and where the context requires, each, a “Lessor”), the lessee entities listed on the signature page hereof (collectively, jointly and severally, the “Lessee,” and where the context requires, each, a “Lessee”).

 

RECITALS

 

The circumstances underlying the execution of this Amendment are as follows:

 

A.   Lessor, as landlord, and Lessee, as lessee, are parties to that certain Third Amended and Restated Master Lease dated as of November 4, 2010 (the “Existing Lease”), pursuant to which Lessee leases forty (40) facilities from Lessor.  All terms used in this Amendment and not defined herein shall have the meanings assigned to them in the Existing Lease.

 

B.   Lessor and Lessee desire to amend the Existing Lease to provide for (i) certain capital improvements to the Facilities to be funded and performed by Lessor, and (ii) an increase in rent payable in connection with such improvements.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             Definitions.

 

(a)           Any capitalized term used but not defined in this Amendment will have the meaning assigned to such term in the Existing Lease.

(b)           In addition to the other definitions contained herein, when used in this Amendment the following terms shall have the following meanings:

 

2011 Facilities: means the Facilities listed on Exhibit A to this Amendment.

 

2011 Project(s): means the capital improvements listed on Exhibit A to this Amendment.

 

2011 Project Documents: has the meaning set forth in Section 2(b).

Funded Amount: means, with respect to each 2011 Project, the aggregate funds expended by Lessor on such 2011 Project, and with respect to all 2011 Projects, the aggregate funds expended by Lessor on all 2011 Projects.

 

1

 

 

Monthly 2011 Capex Rent: means, with respect to each 2011 Project, an amount equal to (A) the Funded Amount for such 2011 Project multiplied by (B) ten percent (10.00%) divided by (C) twelve (12).

Project Costs: means all costs and fees paid or accrued in connection with a 2011 Project.

 

Project Management Agreement: has the meaning set forth in Section 2(d).

 

Proposed 2011 Project Budget: has the meaning set forth in Section 2(b).

 

Proposed 2011 Project Description: has the meaning set forth in Section 2(b).

 

Proposed 2011 Project Timeline: has the meaning set forth in Section 2(b).

 

Substantial Completion Date:  A 2011 Project will be complete only at such time as (i) all improvements to the 2011 Project called for in the Approved 2011 Project Documents have been substantially installed or completed in a manner reasonably satisfactory to Lessor and (ii) if required under law, a public authority has issued a final certification, consent or approval for such 2011 Project subject only to such conditions as may be reasonably acceptable to Lessor.

 

Target Completion Date: means the date that is identified as the anticipated Substantial Completion Date in the Project Description contemplated by Section 2(b) of this Amendment.

 

(c)           The definition of the following capitalized term set forth in Section 2.1 of the Existing Lease is hereby amended and restated in its entirety as follows:

 

Rent:  Collectively, the Base Rent, the Monthly 2011 Capex Rent and Additional Charges.

 

(d)           From and after the date of this Amendment, each reference to the Existing Lease, means the Existing Lease as modified by this Amendment.

2.             2011 Projects.

 

(a)           In General. Lessor shall have the right at any time prior to December 31, 2012 to undertake, at its sole cost and expense, the 2011 Projects.  In the event Lessor elects to undertake a 2011 Project the provisions of this Section 2 shall govern such 2011 Project.

 

 

2

 

 

(b)           Project Description. Lessor shall submit to Lessee, for Lessee’s review and approval, which approval shall not be unreasonably withheld, a reasonably detailed description of the 2011 Project (the “Proposed 2011 Project Description”), along with a proposed timeline for completion of the 2011 Project, which timeline shall include the anticipated Substantial Completion Date (the “Proposed 2011 Project Timeline”), and a proposed budget with respect thereto (the “Proposed 2011 Project Budget”). Lessor shall not commence the proposed 2011 Project until each of the Proposed 2011 Project Description, the Proposed 2011 Project Timeline, and the Proposed 2011 Project Budget have been approved by Lessee and once approved by Lessee such document shall be collectively referred to herein as the “Approved 2011 Project Documents.”  Lessor and Lessee acknowledge and agree that the Monthly 2011 Capex Rent shall be calculated based upon the actual funds expended by Lessor, and not on the Proposed 2011 Project Budget or on the Approved 2011 Project Documents. Lessee acknowledges and agrees that the Proposed 2011 Project Budget shall include (i) all reasonable costs incurred by Lessor in connection with the 2011 Project, including, but not limited to, Lessor’s reasonable legal counsel and due diligence costs, title insurance, survey, UCC searches and filing fees, if any, and the fees of Lessor’s Architect and (ii) Lessor’s financing costs related to the funds used to pay for the 2011 Project. Lessee acknowledges and agrees that the failure on the part of Lessor to include any cost in the Proposed 2011 Project Budget or in the Approved 2011 Project Documents, or to accurately estimate the amount of any such cost, shall not preclude Lessor from including the full amount of such cost in the Funded Amount.

 

(c)           General Contractor. Lessor’s obligation to undertake the 2011 Project shall be specifically conditioned on Lessor entering into a contract with a general contractor acceptable to Lessor in the exercise of its sole and absolute judgment and on terms and conditions acceptable to Lessor in the exercise of its sole and absolute judgment.

 

(d)           Project Management. Lessor shall have the right, but not the obligation, in connection with any 2011 Project to engage Lessee (or one or more of its Affiliates) to supervise the day to day construction and completion of the 2011 Project pursuant to a project management agreement to be entered into by Lessor and Lessee on terms and conditions acceptable to Lessor in the exercise of its sole and absolute judgment (the “Project Management Agreement”).  Lessee acknowledges and agrees that, for purposes of Section 16.1.12 of the Master Lease, it shall be an Event of Default under the Existing Lease if Lessee defaults in its obligations under the Project Management Agreement and such default is not cured within any cure period set forth in the Project Management Agreement (as compared to in Section 16.1.12) and the applicable 2011 Project is not completed by the Target Completion Date as a result of such uncured default under the Project Management Agreement.

 

 

3

 

 

(e)           Character of Construction.  All construction of the 2011 Projects will be of sound materials, in good and workmanlike manner, free and clear of all liens, claims and encumbrances (other than the liens and security interests securing the obligations of the Lessee under the Existing Lease), and in compliance with all laws, ordinances, regulations and restrictions affecting the applicable 2011 Facility and all requirements of all governmental authorities having jurisdiction over the applicable 2011 Facility and of the appropriate board of fire underwriters or other similar body, if any, and any applicable health care authority.

 

(f)           Records and Reports.   During the construction period and until six (6) months after each of the 2011 Projects is completed, Lessor will use commercially reasonable efforts to maintain accurate and complete books and records relating to each 2011 Project, including, but not limited to, (i) copies and lists of all paid and unpaid bills for labor and materials with respect to each 2011 Project, (ii) construction budgets and revisions thereof showing the estimated cost of each 2011 Projects and the source of the funds required at any given time to complete and pay for the same, (iii) receipted bills or other evidence of payment with respect to the cost of each 2011 Project, and (iv) such reports as to other matters relating to each 2011 Project as Lessee may reasonably request.

 

(g)           Access.  Notwithstanding anything to the contrary contained in this Lease, Lessee will permit Lessor and Lessor's representatives to have access to any 2011 Facility at which a 2011 Project is being performed at all reasonable times and to conduct such investigations and inspections thereof as Lessor shall determine necessary, including without limitation in connection with inspecting all work done, labor performed and materials furnished in connection with each 2011 Project.  Lessee will cooperate with Lessor and its representatives and agents during such inspections.  All inspections that may be performed by Lessor and its agents will be exclusively for the benefit of Lessor and will impose no obligation whatsoever upon Lessor for the benefit of any person.  No inspection by Lessor will create any obligation on Lessor other than the obligations otherwise specifically imposed on Lessor under this Amendment or the terms of any construction documents related to the 2011 Project to which Lessor may be a party or relieve Lessee of any obligation it may have under the Existing Lease.

 

(h)           Right to Withdraw a 2011 Project. Notwithstanding anything to the contrary set forth in this Section 2, Lessor shall have the right, on written notice to Lessee, to withdraw a 2011 Project prior to the commencement of construction thereof.

 

(i)           Funding of a 2011 Project. Lessor shall be solely responsible for the payment of all Project Costs related to each 2011 Project.

 

3.             2011 Project Rent. From and after the first advance by Lessor of any portion of the Funded Amount with respect to one or more of the 2011 Projects, Lessee shall pay to Lessor the Monthly 2011 Capex Rent due with respect to the Lease Year in which such advance was/advances were made. The Monthly 2011 CapEx Rent applicable to each advance of the Funded Amount shall be due and payable commencing with the first month following the month in which such advance is made and shall be due and payable as and when the Litchfield Base Rent or Non-Litchfield Base Rent, as applicable, is payable under the Master Lease.  Lessor and Lessee acknowledge and agree that twelve (12) times the Monthly 2011 Capex Rent as of the last month of the applicable Lease Year (including in such calculation of Monthly 2011 Capex Rent any amounts advanced during such month) shall be included as Litchfield Base Rent or Non-Litchfield Base Rent, as applicable, for “the previous Lease Year” in the calculation of the annual Litchfield Base Rent and Non-Litchfield Base Rent due during the subsequent Lease Year and accordingly that there shall be no carry over from one Lease Year to another of the Monthly 2011 Capex Rent.  Set forth in Exhibit B to this Amendment is an example of the calculation of the Monthly 2011 Cap Ex Rent and the Base Rent from one Lease Year to another with respect to the 2011 Projects.

 

 

4

 

 

4.             Unavoidable Delay. Upon the occurrence and during the continuance of an Unavoidable Delay with respect to a 2011 Project and the giving of written notice thereof to Lessee, Lessor shall be temporarily released without any liability on its part from the performance of its obligations to complete such 2011 Project, but only to the extent and only for the period that their performance of each such obligation is prevented by the Unavoidable Delay.  Such notice shall include a description of the nature of the Unavoidable Delay, and its cause and possible consequences. Lessor shall promptly notify the other party of the termination of the event giving rise to the Unavoidable Delay.

 

5.             Expenses of Lessor.  All reasonable costs incurred by Lessor in connection with any 2011 Project, including, but not limited to, Lessor’s reasonable legal counsel and due diligence costs, title insurance, survey, UCC searches and filing fees, if any, and the fees of Lessor’s Architect shall be added to the Funded Amount for any 2011 Project.

 

6.             Indemnity.  Pursuant to the terms and conditions of Section 21.1 of the Existing Master Lease, Lessee will protect, indemnify, save harmless and defend Lessor, its principals, officers, directors and agents and employees from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses), to the extent permitted by law, imposed upon or incurred by or asserted against Lessor by reason of the undertaking of the 2011 Projects, including, but not limited to, any liens, suits, proceedings, or actions in favor of or brought by any contractors engaged in connection with the 2011 Projects.  Nothing in this Section shall be construed as indemnifying Lessor against its own grossly negligent acts or omissions or willful misconduct

 

7.             Enforceability of Lease.  Except as expressly and specifically set forth in this Amendment, the Existing Lease remain unmodified and in full force and effect.

 

8.             Execution and Counterparts.  This Amendment may be executed in any number of counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but when taken together shall constitute one and the same Amendment.

 

9.             Headings; Exhibits.  Section headings used in this Amendment are for reference only and shall not affect the construction of the Agreement.  All exhibits and attachments attached hereto are incorporated herein by this reference.

 

 

5

 

 

10.           Entire Agreement.  This Amendment together with the Existing Lease and the other Transaction Documents is intended by the parties to be a complete and exclusive statement of the agreement and understanding of the parties in respect of the subject matter contained herein and therein.

 

 

SIGNATURES ON FOLLOWING PAGE

 

 

 

 

6

 

 

Signatures Pages To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

 

IN WITNESS WHEREOF, the parties hereby execute this First Amendment to Third Amended and Restated Master Lease effective as of the day and year first set forth above.

 

LESSOR:

 

DELTA INVESTORS I, LLC, a Maryland limited liability company, and

DELTA INVESTORS II, LLC, a Maryland limited liability company

OHI ASSET, LLC, a Delaware limited liability company

OHI ASSET (CA), LLC, a Delaware limited liability company

OHI ASSET (CO), LLC, a Delaware limited liability company

OHI ASSET (ID), LLC, a Delaware limited liability company

 

	 	By:	OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation, Its Member
	 	 	 	 	 
	 	 	By:	/s/ Daniel J. Booth	 
	 	 	Name:	Daniel J. Booth	 
	 	 	Title:	Chief Operating Officer	 
	 	 	 	 	 
	 	 	 	 	 
	 	OHIMA, INC., a Massachusetts corporation
	 	 	 	 	 
	 	By:	/s/ Daniel J. Booth	 
	 	Name:	Daniel J. Booth	 
	 	Title:	Chief Operating Officer	 

 

STATE OF MARYLAND         )

                                                      ) ss.

COUNTY OF BALTIMORE     )

This instrument was acknowledged before me on the 31st day of May, 2011, by Daniel J. Booth, the COO of OHIMA, Inc., a Massachusetts corporation, and Omega Healthcare Investors, Inc., a Maryland corporation, the sole member of Delta Investors I, LLC, a Maryland limited liability company, Delta Investors II, LLC, a Maryland limited liability company, OHI Asset, LLC, a Delaware limited liability company, OHI Asset (CA), LLC, a Delaware limited liability company, OHI Asset (CO), LLC, a Delaware limited liability company, OHI Asset (ID), LLC, a Delaware limited liability company, on behalf of said corporations and companies.

 

	 	Judith A. Jacobs
	 	Notary Public, Baltimore County, MD
	 	My commission expires: May 12, 2012

 

 

Signature Page - 1 of 3

 

 

Signatures Pages To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

LESSEE:

 

SUNBRIDGE CARE ENTERPRISES, INC., a Delaware corporation

SUNBRIDGE CIRCLEVILLE HEALTH CARE CORP., an Ohio corporation

SUNBRIDGE BECKLEY HEALTH CARE CORP., a West Virginia corporation

SUNBRIDGE PUTNAM HEALTH CARE CORP., a West Virginia corporation

SUNBRIDGE BRASWELL ENTERPRISES, INC., a California corporation

SUNBRIDGE MEADOWBROOK REHABILITATION CENTER, a California corporation

SUNBRIDGE DUNBAR HEALTH CARE CORP., a West Virginia corporation

SUNBRIDGE MARION HEALTH CARE CORP., an Ohio corporation

SUNBRIDGE SALEM HEALTH CARE CORP., a West Virginia corporation

SUNBRIDGE REGENCY-NORTH CAROLINA, INC., a North Carolina corporation

SUNBRIDGE HEALTHCARE, LLC, a New Mexico limited liability company

SUNBRIDGE SHANDIN HILLS REHABILITATION CENTER, a California corporation

SUNBRIDGE REGENCY-TENNESSEE, INC., a Tennessee corporation

FALMOUTH HEALTHCARE, LLC, a Delaware limited liability company

MASHPEE HEALTHCARE, LLC, a Delaware limited liability company

WAKEFIELD HEALTHCARE, LLC, a Delaware limited liability company

WESTFIELD HEALTHCARE, LLC, a Delaware limited liability company

PEAK MEDICAL COLORADO NO. 2, INC., a Delaware corporation

PEAK MEDICAL OF IDAHO, INC., a Delaware corporation

PEAK MEDICAL OF BOISE, INC., a Delaware corporation

 

 

	 	By:	/s/ Brandi Riddle	 
	 	Name:	Brandi Riddle	 
	 	Title:	Treasurer	 

 

STATE OF New Mexico           )

                                                      ) ss.

COUNTY OF Bernalillo             )

 

Signature Page - 2 of 3

 

 

Signatures Pages To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

 

This instrument was acknowledged before me on the 12th day of May, 2011, by Brandi Riddle, the Treasurer of SunBridge Care Enterprises, Inc., a Delaware corporation, SunBridge Circleville Health Care Corp., an Ohio corporation, SunBridge Beckley Health Care Corp., a West Virginia corporation, SunBridge Putnam Health Care Corp., a West Virginia corporation, SunBridge Braswell Enterprises, Inc., a California corporation, SunBridge Meadowbrook Rehabilitation Center, a California corporation, SunBridge Dunbar Health Care Corp., a West Virginia corporation, SunBridge Marion Health Care Corp., an Ohio corporation, SunBridge Salem Health Care Corp., a West Virginia corporation, SunBridge Regency-North Carolina, Inc., a North Carolina corporation, SunBridge Healthcare, LLC, a New Mexico limited liability company, SunBridge Shandin Hills Rehabilitation Center, a California corporation, SunBridge Regency-Tennessee, Inc., a Tennessee corporation, Falmouth Healthcare, LLC, a Delaware limited liability company, Mashpee Healthcare, LLC, a Delaware limited liability company, Wakefield Healthcare, LLC, a Delaware limited liability company, Westfield Healthcare, LLC, a Delaware limited liability company, Peak Medical Colorado No. 2, Inc., a Delaware corporation, Peak Medical of Idaho, Inc., a Delaware corporation, and Peak Medical of Boise, Inc., a Delaware corporation, on behalf of said corporations and companies.

 

	 	Virginia Lovelace
	 	Notary Public, NM County, Bernalillo
	 	My commission expires: 6/2/14

 

 

Signature Page - 3 of 3

 

 

Acknowledgement Pages To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

 

The undersigned hereby consent to the transactions contemplated by this First Amendment to Third Amended and Restated Master Lease, ratify and affirm their respective Guaranties and other Transaction Documents, and acknowledge and agree that the performance of the Master Lease and other Transaction Documents and obligations described therein are secured by their Guaranties and other Transaction Documents on the same terms and conditions in effect prior to this amendment.

 

	 	
SUN HEALTHCARE GROUP, INC., a Delaware corporation

	 	  	  
	 	  	  
	 	
By:

	
/s/ Brandi Riddle

	 	
Name:

	
Brandi Riddle

	 	
Title:

	
Treasurer

	 	  	  
	 	
HARBORSIDE HEALTHCARE, LLC, a Delaware limited liability company

	 	  	  
	 	  	  
	 	
By:

	
/s/ Brandi Riddle

	 	
Name:

	
Brandi Riddle

	 	
Title:

	
Treasurer

	 	  	  
	 	  	  
	 	
PEAK MEDICAL, LLC, a Delaware limited liability company

	 	  	  
	 	  	  
	 	
By:

	
/s/ Brandi Riddle

	 	
Name:

	
Brandi Riddle

	 	
Title:

	
Treasurer

 

 

Acknowledgement Page - 1 of 1

 

 

Exhibit A To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

 

Description of 2011 Projects

 

	
FACILITY

	
ESTIMATED FUNDED

AMOUNT

	
PROJECT DESCRIPTION

	
SunBridge Care & Rehab for LaFollette

 

LaFollette, TN

	
$3,700,000

	
Cosmetic improvements to the Facility, addition within the Facility

of a 20 bed rehab recover suite (“RRS”), addition of a physical

therapy department to the Facility and acquisition of a free standing

storage building to be located outside of the Facility

	
SunBridge Care & Rehab for Lexington

 

Lexington, NC

	
$2,500,000

	
Addition within the Facility of a 29 bed RRS, conversion of space

in the basement of the Facility into a therapy gym, addition of a

elevator on the exterior of the Facility to create access to the gym and

cosmetic improvements to the areas of the Facility affected by the

foregoing

	
Pueblo Extended Care Center

 

Pueblo, CO

 

 

	
$3,000,000

Lessor does not anticipate

commencing such project until

the facility has cleared its

“special focus facility” status

	
Addition within the Facility of a 22 bed RRS, conversion of space in

the Facility into a therapy gym, upgrades to the  HVAC and

ventilation systems, roof replacement, parking lot improvements,

foundation repair and replacement and cosmetic improvements to the

areas of the Facility affected by the foregoing

	
Wakefield Nursing and Rehabilitation Center

 

Wakefield, MA

	
$3,300,000

	
Extensive cosmetic renovation to the Facility, including

improvements to the existing RRS and therapy gym and the development

 of new common areas within the Facility and HVAC system upgrades

 

 

 

Exhibit A - Page 1 of 1

 

 

Exhibit B To

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER LEASE

 

Sample Calculation of Monthly 2011 Capex Rent inclusion in Base Rent

 

 

 

Exhibit B - Page 1 of 1

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