INDEMNIFICATION AGREEMENT
EXHIBIT 10.24
This Indemnification Agreement (“Agreement”) is effective as of this ______ day of _______________,
200___, by and between Superconductor Technologies Inc., a Delaware corporation (the “Company”), and
_______________ (“Indemnitee”).
WHEREAS, the Company and Indemnitee recognize the continued difficulty in obtaining liability
insurance for its directors, officers, employees, agents and fiduciaries, the significant increases
in the cost of such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate
litigation in general, subjecting directors, officers, employees, agents and fiduciaries to
expensive litigation risks at the same time as the availability and coverage of liability insurance
has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as adequate under the
present circumstances, and the Indemnitee and other directors, officers, employees, agents and
fiduciaries of the Company may not be willing to continue to serve in such capacities without
additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee
to continue to provide services to the Company, wishes to provide for the indemnification and
advancing of expenses to Indemnitee to the maximum extent permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Indemnification of Expenses. The Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other participant in,
any threatened, pending or completed action, suit, proceeding or alternative dispute resolution
mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding or alternative dispute resolution
mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a “Claim”)
by reason of (or arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company; or any
subsidiary of the Company, or 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, or by reason of any action or inaction on the part of Indemnitee while serving in
such capacity (hereinafter an “Indemnifiable Event”) against any and all expenses (including
attorneys’ fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in advance by the Company,
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approval shall not be unreasonably withheld) of such Claim 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 (collectively, hereinafter “Expenses”), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses. Such payment of
Expenses shall be made by the Company as soon as practicable but in any event no later than five
days after written demand by Indemnitee therefor is presented to the Company.
(b) Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the
Company under Section 1(a) shall be subject to the condition that the Reviewing Party (as described
in Section 10(e) hereof) shall not have determined (in a written opinion, in any case in which the
Independent Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would not
be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make
an advance payment of Expenses to Indemnitee pursuant to Section 2(a) (an “Expense Advance”) shall
be subject to the condition that, if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall
be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any determination made by the Reviewing
Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be
binding and 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 lapsed). Indemnitee’s obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been
a Change in Control (as defined in Section 10(c) hereof), the Reviewing Party shall be selected by
the Board of Directors, 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 of Directors who were
directors immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not
be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on
the Company and Indemnitee.
(c) 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 of Directors who were directors immediately prior to such Change in Control) then
with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of
Expenses and Expense Advances under this Agreement or any other agreement or under the Company’s
Certificate of Incorporation or Bylaws as now or hereafter in effect, Independent Legal Counsel (as
defined in Section 10(d) hereof) shall be selected by the Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would have permitted to be indemnified under applicable law and the Company agrees to
abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal
Counsel referred to
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above and to fully indemnify such counsel against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
(d) Mandatory Payment of Expenses. Notwithstanding any other provision of
this Agreement other than Section 9 hereof, to the extent that Indemnitee has been successful on
the merits or otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit, proceeding, inquiry or investigation referred to in
Section (1) (a) hereof or in the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by the Indemnitee in connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by the Indemnitee. The advances to be made hereunder shall be paid by the Company to
Indemnitee as soon as practicable but in any event no later than five days after written demand by
Indemnitee therefor to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to Indemnitee’s right to be indemnified under this Agreement, give the Company notice in
writing as soon as practicable of any claim made against Indemnitee for which indemnification will
or could be sought under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of this Agreement (or
such other address as the Company shall designate in writing to the Indemnitee). In addition,
Indemnitee shall give the Company such information and cooperation as it may reasonably require and
as shall be within Indemnitee’s power.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement, the
termination of any 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 of
presumption that 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. In
addition, neither the failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did
not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable law, shall be a
defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief. 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 Indemnitee is not so
entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company of a
notice of a Claim pursuant to Section 2(b) hereof, the Company has liability insurance in effect
which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim
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 action, suit, proceeding, inquiry
or investigation in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company, if appropriate, shall be entitled to
assume the defense of such Claim with counsel approved by Indemnitee, upon the delivery to
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Indemnitee of written notice of its election so to do. After delivery of such notice, approval of
such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not
be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall have the right to
employ Indemnitee’s counsel in any such Claim at Indemnitee’s expense and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee
shall have reasonably concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such
counsel to defend such Claim, then the fees and expenses of Indemnitee’s counsel shall be at the
expense of the Company.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation,
the Company’s Bylaws or by statute. In the event of any change after the date of this Agreement in
any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify
a member of its Board of Directors or an officer, employee, agent or fiduciary, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by
such change. In the event of any change in any applicable law, statute or rule which narrows the
right of a Delaware corporation to indemnify a member of its Board of Directors or an officer,
employee, agent or fiduciary, such change, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the
parties’ rights and obligations hereunder except as set forth in Section 8(a) hereof.
(b) Nonexclusivity. The indemnification provided by this Agreement shall be
in addition to any rights to which Indemnitee may be entitled under the Company’s Certificate of
Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the
General Corporation Law of the State of Delaware, or otherwise. The indemnification provided under
this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in
an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.
4. 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
Indemnitee has otherwise actually received payment (under any insurance policy, Certificate of
Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of Expenses incurred in
connection with any Claim, but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit the Company from
indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be
required in the future to undertake with the Securities and Exchange Commission to
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submit the question of indemnification to a court in certain circumstances for a determination of
the Company’s right under public policy to indemnify Indemnitee.
7. Liability Insurance. To the extent the Company maintains liability insurance
applicable to directors, officers, employees, agents or fiduciaries, Indemnitee shall be covered by
such policies in such a manner as to provide Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or
of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of
the Company’s key employees, agents or fiduciaries, if Indemnitee is not an officer or director but
is a key employee, agent or fiduciary.
8. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
omissions or transactions from which Indemnitee may not be relieved of liability under applicable
law.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way
of defense, except (i) with respect to actions or proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other agreement or insurance policy or under
the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims
for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the
initiation or bringing of such Claim, or (iii) as otherwise as required under Section 145 of the
Delaware General Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery, as the case may
be.
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred
by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret
this Agreement, if a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous;
or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and
the payment of profits arising from the purchase and sale by Indemnitee of securities in violation
of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor
statute.
9. Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s estate,
spouse, heirs, executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of action of the Company
shall be extinguished and deemed released unless asserted by the timely filing of a legal action
within such two-year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the “Company” shall
include, in addition to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its directors, officers,
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employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other enterprise.
Indemnitee shall stand in the same position under the provisions of this Agreement with respect to
the resulting or surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to “serving at the request of
the Company” shall include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director, officer, employee, agent
or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and
if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to
in this Agreement.
(c) For purposes of this Agreement a “Change in Control” shall 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), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or 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, (A) who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the combined voting power of
the Company’s then outstanding Voting Securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by such person, or (B) becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing more than 20% of the total voting power represented by the Company’s
then outstanding Voting Securities, (ii) during any period of two consecutive years, the
individuals who at the beginning of such period constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a 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 of (in one transaction or a series of transactions) all of substantially all of the
Company’s assets.
(d) For purposes of this Agreement, “Independent Legal Counsel” shall mean
an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(c)
hereof, who shall not have otherwise performed services for the Company or Indemnitee within the
last three years (other than with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements.)
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(e) For purposes of this Agreement, a “Reviewing Party” shall mean any
appropriate person or body consisting of a member or members of the Company’s Board of
Directors or any other person or body appointed by the Board of Directors who is not a party to the
particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.
(f) For purposes of this Agreement, “Voting Securities” shall mean any
securities of the Company that vote generally in the election of directors.
11. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. 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 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 Indemnitee continues to serve as a director or officer of the Company or of any other
enterprise at the Company’s request.
13. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the Company to enforce
or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be paid all
Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement of Expenses with
respect to such action, unless as a part of such action a court of competent jurisdiction over such
action determines that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action instituted by or
in the name of the Company under this Agreement to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense
of such action (including costs and expenses incurred with respect to Indemnitee’s counterclaims
and cross-claims made in such action), and shall be entitled to the advancement Expenses with
respect to such action, unless as a part of such action a court having jurisdiction over such
action determines that each of Indemnitee’s material defenses to such action were made in bad faith
or were frivolous.
14. Notice. All notices, requests, demands and other communication under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed
for by the party addressed, on the date of such delivery, or (ii) if mailed by domestic certified
or registered mail with postage prepaid, on the third business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of this Agreement, or as
subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of Delaware for all purposes in
connection with any action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be commenced, prosecuted and continued only
in the Court of Chancery of the State of Delaware in and for New Castle County, which shall be the
exclusive and only proper forum for adjudicating such a claim.
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16. 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
sentence) are 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 limitations, 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.
17. Choice of Law. This Agreement shall be governed by and its provisions
construed and enforced in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents, entered into and to be performed entirely within the State of
Delaware, without regard to the conflict of laws principles thereof.
18. 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 Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary to secure such
rights and to enable the Company effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed by both 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.
20. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supercedes and merges all previous written and oral
negotiations, commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the
Company or any of its subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| SUPERCONDUCTOR TECHNOLOGIES INC. |
||||
| By: | ||||
| Title: | ||||
| AGREED TO AND ACCEPTED INDEMNITEE: |
||||
| (signature) | ||||
| (name of Indemnitee) | ||||
| (address) | ||||
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