INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is entered into effective
as of December 30, 2004 (the "Effective Date") by and among Advanced
Communication Technologies, Inc., a Florida corporation ("ACT"); XXXXXXXX X. XX
("Li"), and XXXXXXXXX XXX ("Hwa" and together with Li, referred to as "Li")
husband and wife residing in California; HUI XXXXXXX XXX ("X. Xxx") and JEY XXXX
XXX ("Yao" and together with X. Xxx, referred to as "Xxx"), husband and wife
residing in California. Li and Xxx will be collectively referred to hereinafter
as "Indemnitees" or individually as an "Indemnitee."
RECITALS
WHEREAS, Indemnitees collectively own 6,454,300 shares (the "Shares") of
the common stock, par value $0.001 per share, of Pacific Magtron International
Corp., a Nevada corporation ("PMIC");
WHEREAS, ACT and Indemnitees have entered into a Stock Purchase Agreement,
pursuant to which ACT will purchase all of the shares of common stock of PMIC
owned by Indemnitees (the "Stock Purchase");
WHEREAS, Xxxxxxxx X. Xx has entered into an Individual Guaranty (the "Li
Guaranty") relating to the Company's $3,500,000 inventory financing facility
provided by Textron Financial Corporation (the "Textron Facility"), a true and
correct copy of which is attached hereto as Exhibit A;
WHEREAS, Hui Xxxxxxx Xxx has entered into an Individual Guaranty (the "Xxx
Guaranty") relating to the Textron Facility, a true and correct copy of which is
attached hereto as Exhibit B; and
WHEREAS, it is a condition to the Stock Purchase that the Company and
Indemnitees enter into this Agreement effective as of the Effective Date.
AGREEMENTS
The parties hereto, intending to be legally bound by this Agreement,
hereby agree as follows:
1. Capitalized Terms. All capitalized terms used but not otherwise defined
in this Agreement will have the meaning ascribed to such terms in the Stock
Purchase Agreement entered into by and between ACT and Indemnitees (the
"Purchase Agreement").
2. Indemnification of Indemnitees.
(a) General. From and after the Effective Date, the ACT will
indemnify Indemnitees as provided in this Section 2. The term "Damages" will
mean all liabilities, demands, claims, actions or causes of action, regulatory,
legislative, or judicial proceedings or investigations, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including, without
limitation, reasonable attorneys', accountants', investigators', and experts'
fees and expenses, arising out of, in connection with, or in any manner relating
to any such claims.
(b) Indemnification of Li. ACT hereby agrees to defend, indemnify,
save, and keep harmless Li, and their successors and permitted assigns, against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of their respective obligations under the Li
Guaranty, including, but not limited to, any Damages arising from or relating
to: (i) any breach by the Company or PMIC of, or failure by the Company or PMIC
to comply with, any of its covenants or obligations under the Textron Facility;
(ii) the failure to discharge when due any obligation or liability of the
Company or PMIC under the Textron Facility, or any claim against Li with respect
to any such liability or obligation or alleged liability or obligation; and
(iii) any claims by parties other than the Company or PMIC relating to the
Textron Facility to the extent caused by acts or omissions of the Company or
PMIC occurring after the Effective Date, including, without limitation, Damages
which arise out of the ACT's closing of the Stock Purchase or subsequent
operation of PMIC's business.
(c) Indemnification of Xxx. ACT hereby agrees to defend, indemnify,
save, and keep harmless Xxx, and their successors and permitted assigns, against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of their respective obligations under the Xxx
Guaranty, including, but not limited to, any Damages arising from or relating
to: (i) any breach by the Company or PMIC of, or failure by the Company or PMIC
to comply with, any of its covenants or obligations under the Textron Facility;
(ii) the failure to discharge when due any obligation or liability of the
Company or PMIC under the Textron Facility, or any claim against Xxx with
respect to any such liability or obligation or alleged liability or obligation;
or (iii) any claims by parties other than the Company or PMIC relating to the
Textron Facility to the extent caused by acts or omissions of the Company or
PMIC occurring after the Effective Date, including, without limitation, Damages
which arise out of the ACT's closing of the Stock Purchase or subsequent
operation of PMIC's business.
3. Selection of Counsel. ACT assumes the defense of any claims for Damages
with legal counsel reasonably acceptable to Indemnitees.
4. Settlement. ACT will not settle any claim in any manner which would
impose any obligation on any Indemnitee, without such Indemnitee's prior written
consent.
5. Enforcement.
(a) In any action for indemnification, the burden of proving that
indemnification is not required under this Agreement will be on the Company.
(b) In the event that any action is instituted under this Agreement,
or to enforce or interpret any of the terms or conditions of this Agreement, the
prevailing party will be entitled to recover from, and have paid by, the other
party all court and arbitrator's costs and expenses, including reasonable
counsel fees, incurred by the prevailing party with respect to such action.
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6. Severability. In the event that any provision of this Agreement is
determined by a court of competent jurisdiction to require the Company to do or
to fail to do any act which is in violation of applicable law, such provision
will be limited or modified in its application to the minimum extent necessary
to avoid a violation of law, and, as so limited or modified, such provision and
the balance of this Agreement will be enforceable in accordance with their
terms.
7. Choice of Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of California.
8. Continuation of Indemnification. All agreements and obligations of the
Company contained herein will continue during the period that the Li Guaranty
and the Xxx Guaranty are effective, as the case may be, and will continue
thereafter so long as Indemnitees will be subject to any possible claims for
Damages under such agreements.
9. Subrogation. In the event of payment by the Company under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of each Indemnitee, who will execute all documents and
take all actions reasonably requested by the Company to implement such right of
subrogation.
10. Successors and Assigns. This Agreement will be (i) binding upon all
successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and (ii) will be binding on and inure to the benefit of the
heirs, personal representatives and estate of each Indemnitee. In the event that
the Company or any of its assets is sold or in the event that Company is merged
with any other entity, the Company will insure that a term and condition of the
sale or merger will be that all of Company's obligations under this Agreement
will be assumed by the buyer or successor.
11. Amendment. No amendment, modification, termination or cancellation of
this Agreement will be effective unless made in writing signed by each of the
parties hereto.
12. Authorization and Approval. The Company confirms and agrees that it
has entered into this Agreement and assumed the obligations imposed on it under
this Agreement to induce Indemnitees to agree to the Stock Purchase, and
acknowledges that Indemnitees are relying upon the full enforcement and binding
nature of this Agreement in continuing in finalizing such transaction.
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IN WITNESS WHEREOF, the Company and Indemnitees have executed this
Agreement as of the Effective Date.
INDEMNITEES:
/s/ Hui Xxxxxxx Xxx
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HUI XXXXXXX XXX, an individual
/s/ Jey Xxxx Xxx
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JEY XXXX XXX, an individual
/s/ Xxxxxxxx X. Xx
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XXXXXXXX X. XX, an individual
/s/ Xxxxxxxxx Xxx
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XXXXXXXXX XXX, an individual
THE COMPANY:
Advanced Communication Technologies, Inc.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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EXHIBIT A
Li Guaranty
(Attached)
EXHIBIT B
Xxx Guaranty
(Attached)
