DIRECTOR’S AGREEMENT
THIS
AGREEMENT
(the “Agreement”) is made as of this 26th day of January 2005, by Coda Octopus
Group, Inc., a Delaware corporation (“Coda Octopus”), with its principal place
of business at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and Xxxxxx
Xxxxxxx (the “Director”) (collectively the "Parties").
WHEREAS,
the Director was appointed to serve on the Board of Directors of Coda Octopus
for a term until the next meeting of stockholders and, if replaced, until his
replacement is elected and qualifies and the new Director has accepted such
appointment; and
WHEREAS,
the Parties desire to enter into the Agreement to reflect the Director’s duties
and responsibilities; and
WHEREAS,
the Parties wish to set forth the terms and conditions of service as a
director;
NOW
THEREFORE,
in consideration of the mutual covenants and promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged by the Parties, the Parties agree as follows:
|
1.
|
Roles
and Responsibilities of the Board of Directors
|
The
Board
of Directors represents and is accountable to the shareholders of the Company.
The Board's responsibilities are active and not passive and include the
responsibility to regularly evaluate the strategic direction of the Company,
management policies and the effectiveness with which management implements
its
policies. The Board's responsibilities further include overseeing the structure
and composition of the Company's top management and monitoring legal compliance
and the management of risks related to the Company's operations. In doing so
the
Board may set out annual ranges and/or individual limits for capital
expenditures, investments and divestitures and financial commitments not to
be
exceeded without Board approval.
The
Board
has the responsibility for appointing and discharging the Chief Executive
Officer and the President and the other members of management. Subject to the
requirements of Delaware law, the Compensation Committee of the Board will
confirm the compensation and the employment conditions of management
employees.
The
basic
responsibility of the members of the Board is to act in good faith and with
due
care so as to exercise their business judgment on an informed basis in what
they
reasonably and honestly believe to be the best interests of the Company and
its
shareholders. In discharging that obligation, the directors must inform
themselves of all relevant information reasonably available to
them.
The
incidence of corporate fraud and the increased emphasis on uncovering fraud
and
exposure has resulted in almost daily revelations. The annual cost of fraud
is
significant enough to cause concerned investors to insist on better procedures
for fraud prevention and detection.
There
are
generally three conditions present when fraud occurs: incentive (pressure),
opportunity, and rationalization (attitude). The policies, procedures, and
tone
set by the Company's Board have a direct impact on the prevalence of these
conditions and therefore on the occurrence of fraud.
1
The
most
pervasive area of board influence is developing a culture of compliance.
Arguably more far-reaching than a good system of internal controls, a tone
of
sound ethics and corporate responsibility set at the top and pushed down
throughout the organization, is paramount in addressing the fraud condition
of
rationalization (attitude). Well-designed systems are key to addressing the
condition of opportunity.
The
most
challenging area is pressure or incentive. This condition is fostered internally
in companies as managerial performance and compensation are often linked to
company performance, creating incentive. While performance incentives are an
effective form of remuneration, controls surrounding the determination of
management compensation must be well designed.
Fraud
prevention and detection is another key area of corporate governance. Even
in
the absence of regulation, investors see the benefit of good governance
practices to minimize financial losses and lessen the risk of damage to
corporate reputations - thereby contributing to maintaining the value of shares
in the marketplace.
Investor
relations: adoption of good governance practices will enable the Company to
conduct its business locally and internationally with improved
investor/shareholder support. Pre-compliance without regulation precludes the
likelihood of encountering foreign obstacles to corporate endeavors in raising
capital, competing for business, or merger and acquisition activities. There
is
less chance of an objection being raised on technical or compliance grounds,
reducing project costs and improving the opportunity of success.
| 2. |
Extent
of Services
|
The
Director will devote as much time and attention to the business activities
of
Coda Octopus as is needed to carry out his duties in effectuating the roles
and
responsibilities of the Board of Directors as set forth in paragraph 1 above,
including but not limited to; as a member of the compensation committee, review
of employment arrangement with management personnel, contact with management
to
gain relevant information on an as needed basis, review and analysis of relevant
contracts and business decisions including pro forma financial information
of
product launches and business acquisitions, and review of quarterly and annual
financial statements and contact as needed with in-house accountants and
auditor.
He
may
engage in other business activities which do not conflict with the operations
of
Coda Octopus and may sit on charitable, professional and business Boards
provided that in no event shall the Director be permitted to serve on the board
of directors of any other entity that owns, operates, acquires, sells, develops
and/or manages any companies which are involved in sub sea or sonar inspection
or visualization.
| 3. |
Compensation
and Benefits
|
|
(a)
|
Fees.
Coda Octopus shall pay the Director an initial gross base annual
fee of
$20,000 commencing the first attended meeting of the Board of Directors
and payable quarterly in arrears, plus a fee of $2,500 per meeting
of the
Board of Directors attended by the
Director.
|
|
(b)
|
Reimbursable
Travel.
Coda Octopus shall reimburse the Director for personal travel to
meetings
of the Board of Directors upon presentation by the Director of
documentation, expense statements, vouchers, and/or such other supporting
information as Coda Octopus may reasonably
request.
|
2
|
(c)
|
Initial
Restricted Stock Grant.
Provided that neither the Director nor Coda Octopus has prior thereto
given notice terminating this Agreement, the Director shall, effective
January 26th,
2005 be issued 150,000 shares of common stock of Coda Octopus.
Certificates representing said shares will bear a restrictive legend
stating that sale or other transfer of the shares be made only pursuant
to
an effective registration statement filed with the Securities and
Exchange
Commission (“SEC”) or an exemption from such registration.
|
|
(d)
|
Option
Grant.
On joining the Board of Directors, the Director shall be issued 200,000
options to purchase shares of Coda Octopus common stock with an exercise
price at a level agreed at the start of each year (the exercise price
for
2004-05 and 2005-06 is $1, with this price to be adjusted to match
any
lower warrant or option price included in any financing or offering).
Options will expire five years from date of issue. The Shares underlying
said options will be registered on a piggy back basis in the first
registration statement filed with the SEC under the Securities Act
of
1933. The Director shall also receive each year a grant of 50,000
common
stock purchase options with an exercise price to be determined at
the
first meeting of the Board of Directors in each fiscal year, with
this
grant pro-rated to commence from the first attended meeting of the
Board
of Directors.
|
|
(e)
|
D&O
Insurance Coverage.
During and for a period of at least three years after the Term, the
Director shall be entitled to director and officer insurance coverage
for
his acts and omissions while an officer and director of Coda Octopus
on a
basis no less favorable to him than the coverage provided current
officers
and directors.
|
|
4.
|
Termination
|
|
|
This
Agreement will terminate when the Director no longer serves on the
Board
of Directors.
|
|
5.
|
Effect
of Termination
|
|
Fees
and other compensation to the Director will cease upon termination.
The
Director is entitled to all other compensation received prior to
the date
of termination. Options to purchase stock will terminate 90 days
from the
date of termination.
|
|
6.
|
Confidentiality
|
|
(a)
|
Definition
of Proprietary Information.
The Director acknowledges that he may be furnished or may otherwise
receive or have access to confidential information which relates
to Coda
Octopus’s past, present or future business activities, strategies,
services or products, research and development, specifically all
formulas,
processes, computer code, customer lists, computer user identifiers
and
passwords, and all purchasing, engineering, accounting, marketing
and
other information, proprietary to Coda Octopus and not generally
known,
relating to research, development, manufacture, marketing and sale
of Coda
Octopus products, as well as formulas, computer code, processes and
other
information received by Coda Octopus from third parties under an
obligation of secrecy.
|
|
All
such information, including any materials or documents containing
such
information, shall be considered by Coda Octopus and the Director
as
proprietary and confidential (the “Proprietary
Information”).
|
3
|
(b)
|
Definition
of Inventions.
Invention(s) means all formulas, processes, discoveries, improvements,
ideas and works of authorship, whether patentable or copyrightable
or not,
which the Director learns, has access to, has a part in developing,
first
conceives or first reduces to practice, alone or with others (1)
that are
developed on Coda Octopus time, or (2) that relate directly to Coda
Octopus’ business or actual or anticipated research, or (3) for which Coda
Octopus’ Proprietary Information or other Coda Octopus property is used,
or (4) that result from any of the Director’s work for Coda
Octopus.
|
|
Director's
Obligation With Regard to Inventions.
|
(A) All
Inventions that the Director may learn, have access to, have a part in
developing, first conceive, or first reduce to practice (i) during service
as a
director with Coda Octopus, whether or not during normal work time or at Coda
Octopus’ premises, or (ii) at any time after termination if based on
Confidential Information, are and shall remain the sole property of Coda Octopus
in all countries, and shall be promptly disclosed to and are hereby assigned
to
Coda Octopus without charge to Coda Octopus. In the absence of clear and
convincing proof to the contrary, all formulas, processes, inventions, ideas,
and works of authorship conceived by the Director within one year after
termination that directly relate to Coda Octopus business or demonstrably
anticipated research or development will be considered to be Inventions to
be
disclosed to and owned by Coda Octopus.
(B) The
Director will acknowledge and deliver promptly without charge all documents
to
Coda Octopus, and to do such other acts as may be necessary in Coda Octopus’
opinion to obtain and maintain patents or copyrights and to vest the entire
right and title in Coda Octopus to such patents, copyrights and Inventions
in
all countries, including, if required by Coda Octopus but not limited to,
completion and signing of the Assignment exhibited as Appendix A to this
Agreement. Failure on the part of Coda Octopus at any time to require the
Executive to sell, assign, transfer and set over the entire right, title and
interest in and to said Inventions shall not be deemed to be a waiver of its
rights thereto.
(C) The
obligations of this section shall not apply to any invention developed entirely
on the Director's own time without the use of any Coda Octopus equipment,
supplies, facility or Proprietary Information and (i) which does not relate
to
Coda Octopus business, or to Coda Octopus’ actual or demonstrably anticipated
research or development or (ii) which does not result from any work performed
by
the Director for Coda Octopus.
|
(c)
|
Exclusions.
Notwithstanding the foregoing, Proprietary Information shall not
include
information in the public domain not as a result of a breach of any
duty
by the Director or any other
person.
|
|
(d)
|
Obligations.
Both during and after he serves as a Director, the Director will
preserve
and protect the confidentiality of the Proprietary Information and
all
physical forms thereof, whether disclosed to him before this Agreement
and
Inventions signed or afterward (except as required by applicable
law or
otherwise as necessary in connection with the performance of the
Director’s duties to Coda Octopus hereunder). In addition, the Director
shall not (i) disclose or disseminate the Proprietary Information
to any
third party, including employees of Coda Octopus (or its affiliates)
without a legitimate business need to know; (ii) remove the Proprietary
Information from Coda Octopus’s premises without a valid business purpose;
or (iii) use the Proprietary Information for his own benefit or for
the
benefit of any third party.
|
4
|
(e)
|
Return
of Proprietary Information.
The Director acknowledges that all the Proprietary Information and
Inventions used or generated during the course of working for Coda
Octopus
is the property of Coda Octopus. The Director will deliver to Coda
Octopus
all documents and other tangibles (including diskettes and other
storage
media) containing the Proprietary Information and Inventions at any
time
upon request by the Board of Directors during his service and immediately
upon termination of his service as a director. If requested by Coda
Octopus, the Director will enter into an Assignment of Intellectual
Property.
|
|
7.
|
Noncompetition
and Nonsolicitation
|
|
(a)
|
Restriction
on Competition.
Throughout the period in which the Director serves as such and for
a
period of twelve (12) months thereafter (the “Restricted Period”),
provided, however, that the Restricted Period shall only extend for
six
months following the expiration or termination of the Director’s service
if the Director’service is terminated following a Change in Control, the
Director will not engage, directly or indirectly, as an owner, director,
trustee, manager, member, employee, consultant, partner, principal,
agent,
representative, stockholder, or in any other individual, corporate
or
representative capacity, in any of the following: (i) any subsea
visualization company, or (ii) any other business in which Coda Octopus
is
engaged or is actively planning to engage as of the date of the Director’s
termination.. Notwithstanding the foregoing, the Director shall not
be
deemed to have violated this section solely by reason of his passive
ownership of 1% or less of the outstanding stock of any publicly
traded
corporation or other entity.
|
|
(b)
|
Non-Solicitation
of Clients.
During the Restricted Period, the Director will not solicit, directly
or
indirectly, on his own behalf or on behalf of any other person(s),
any
client of Coda Octopus to whom Coda Octopus had provided services
at any
time during the Director’s service with Coda Octopus in any line of
business that Coda Octopus conducts as of the date of the Director’s
termination of service or that Coda Octopus is actively soliciting,
for
the purpose of marketing or providing any service competitive with
any
service then offered by Coda
Octopus.
|
|
(c)
|
Non-Solicitation
of Employees.
During the Restricted Period, the Director will not, directly or
indirectly, hire or attempt to hire or cause any business, other
than a
Qualified Affiliate, to hire any person who is then or was at any
time
during the preceding six months an employee of Coda Octopus and who
is at
the time of such hire or attempted hire, or was at the date of such
employee’s separation from Coda Octopus a vice president, senior vice
president or director vice president or other senior director employee
of
Coda Octopus.
|
|
(d)
|
Acknowledgment.
The Director acknowledges that he will acquire much Proprietary
Information concerning the past, present and future business of Coda
Octopus as the result of his service as well as access to the
relationships between Coda Octopus and Coda Octopus and their clients
and
employees. The Director further acknowledges that the business of
Coda
Octopus is very competitive and that competition by him in that business
during his service, or after his service terminates, would severely
injure
Coda Octopus. The Director understands that the restrictions contained
in
this Section 7 are reasonable and are required for Coda Octopus’s
legitimate protection, and do not unduly limit his ability to earn
a
livelihood.
|
5
|
(e)
|
Rights
and Remedies upon Breach.
The Director acknowledges that any breach of Restrictive Covenants
would
result in irreparable injury and damage for which money damages would
not
provide an adequate remedy. Therefore, if the Director breaches,
or
threatens to commit a breach of, any of the provisions of the Restrictive
Covenants, Coda Octopus shall have the following rights and remedies,
each
of which rights and remedies shall be independent of the other and
severally enforceable, and all of which rights and remedies shall
be in
addition to, and not in lieu of, any other rights and remedies available
to Coda Octopus under law or in equity (including, without limitation,
the
recovery of damages):
|
|
(i)
|
The
right and remedy to have the Restrictive Covenants specifically enforced
(without posting bond and without the need to prove damages) by any
court
of competent jurisdiction, including, without limitation, the right
to an
entry against the Director of restraining orders and injunctions
(preliminary, mandatory, temporary and permanent) against violations,
threatened or actual, and whether or not then continuing, of such
covenants; and
|
|
(ii)
|
The
right and remedy to require the Director to account for and pay over
to
Coda Octopus and its affiliates all compensation, profits, monies,
accruals, increments or other benefits (collectively, “Benefits”) derived
or received by him as the result of any transactions constituting
a breach
of the Restrictive Covenants, and the Director shall account for
and pay
over such Benefits to Coda Octopus and, if applicable, its affected
affiliates.
|
|
(f)
|
If
any court or other decision-maker of competent jurisdiction determines
that any of the Restrictive Covenants, or any part thereof, is
unenforceable because of the duration or geographical scope of such
provision, then, after such determination has become final and
non-appealable, the duration or scope of such provision, as the case
may
be, shall be reduced so that such provision becomes enforceable and,
in
its reduced form, such provision shall then be enforceable and shall
be
enforced.
|
|
8.
|
Director
Representation
|
|
The
Director represents and warrants to Coda Octopus that he is not now
under
any obligation of a contractual or other nature to any person, business
or
other entity which is inconsistent or in conflict with this Agreement
or
which would prevent him from performing his obligations under this
Agreement.
|
|
9.
|
Enforcement
and Indemnification
|
|
(a)
|
Coda
Octopus, in its sole discretion, may bring an action in any court
of
competent jurisdiction to seek injunctive relief and such other relief
as
Coda Octopus shall elect to enforce the Restrictive Covenants. If
the
courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of breadth of scope or otherwise
it is the intention of Coda Octopus and the Director that such
determination not bar or in any way affect Coda Octopus’s right, or the
right of any of its affiliates, to relief in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants,
as to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each
jurisdiction being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of res judicata.
The parties hereby agree to waive right to a trial by jury for any
and all
disputes hereunder (whether or not relating to the Restrictive
Covenants).
|
6
|
(b)
|
In
accordance with Appendix B to this Agreement, Coda Octopus will indemnify
the Director, to the maximum extent permitted by applicable law,
against
all costs, charges and expenses incurred or sustained by the Director,
including the cost of legal counsel selected and retained by the
Director
in connection with any action, suit or proceeding to which the Director
may be made a party by reason of the Director acting as such. Coda
Octopus
will pay to the Director in advance of the final disposition of any
proceeding all such amounts incurred or suffered.
|
|
10.
|
Miscellaneous
|
|
(a)
|
Litigation
and Regulatory Cooperation.
During and after Director’s service, Director shall reasonably cooperate
with Coda Octopus in the defense or prosecution of any claims or
actions
now in existence or which may be brought in the future against or
on
behalf of Coda Octopus which relate to events or occurrences that
transpired while Director served; provided, however, that such cooperation
shall not materially and adversely affect Director or expose Director
to
an increased probability of civil or criminal litigation. Director’s
cooperation in connection with such claims or actions shall include,
but
not be limited to, being available to meet with counsel to prepare
for
discovery or trial and to act as a witness on behalf of Coda Octopus
at
mutually convenient times. During and after Director’s service, Director
also shall cooperate fully with Coda Octopus in connection with any
investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or
occurrences that transpired while Director served. Coda Octopus shall
also
provide Director with compensation on an hourly basis for requested
litigation and regulatory cooperation that occurs after his termination,
and reimburse Director for all costs and expenses incurred in connection
with his performance under this section including, but not limited
to,
reasonable attorneys’ fees and
costs.
|
|
(b)
|
Notices.
All notices required or permitted under this Agreement shall be in
writing
and shall be deemed effective (i) upon personal delivery, (ii) upon
deposit with the United States Postal Service, by registered or certified
mail, postage prepaid, or (iii) in the case of facsimile transmission
or
delivery by nationally recognized overnight delivery service, when
received, addressed as follows:
|
|
(i)
|
If
to Coda Octopus, to:
|
000
Xxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
|
(ii)
|
If
to the Director, to:
|
00
Xxxxxxxxx Xxxx
Xxxxxxx
Xxxx
Xxxxxxxxx
X.X.
7
|
or
to such other address or addresses as Party shall designate to the
other
in writing from time to time by like
notice.
|
|
(c)
|
Pronouns.
Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms,
and
the singular forms of nouns and pronouns shall include the plural,
and
vice versa.
|
|
(d)
|
Entire
Agreement.
This Agreement constitutes the entire agreement between the parties
and
supersedes all prior agreements and understandings, whether written
or
oral, relating to the subject matter of this
Agreement.
|
|
(e)
|
Amendment.
This Agreement may be amended or modified only by a written instrument
executed by both Coda Octopus and the
Director.
|
|
(f)
|
Governing
Law.
This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the State of New York, without regard to its conflicts
of
laws principles.
|
|
(g)
|
Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of
both
parties and their respective successors and assigns, including any
entity
with which or into which Coda Octopus may be merged or which may
succeed
to its assets or business or any entity to which Coda Octopus may
assign
its rights and obligations under this Agreement; provided, however,
that
the obligations of the Director are personal and shall not be assigned
or
delegated by him.
|
|
(h)
|
Waiver.
No delays or omission by Coda Octopus or the Director in exercising
any
right under this Agreement shall operate as a waiver of that or any
other
right. A waiver or consent given by Coda Octopus or the Director
on any
one occasion shall be effective only in that instance and shall not
be
construed as a bar or waiver of any right on any other
occasion.
|
|
(i)
|
Captions.
The captions appearing in this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance
of any
section of this Agreement.
|
|
(j)
|
Severability.
In case any provision of this Agreement shall be held by a court
or
arbitrator with jurisdiction over the parties to this Agreement to
be
invalid, illegal or otherwise unenforceable, such provision shall
be
restated to reflect as nearly as possible the original intentions
of the
parties in accordance with applicable law, and the validity, legality
and
enforceability of the remaining provisions shall in no way be affected
or
impaired thereby.
|
|
(k)
|
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 instrument.
|
8
IN
WITNESS WHEREOF,
the Parties have executed this Agreement as of the day and year first above
written.
By:
__________________________
Name:
Xxxxx Xxxx
Title:
President
DIRECTOR
______________________________
Name:
Xxxxxx Xxxxxxx
9
APPENDIX
A
ASSIGNMENT
WHEREAS,
Xxxxxx
Xxxxxxx, hereinafter called "Assignor", residing at 00 Xxxxxxxxx Xxxx, Xxxxxxx
Xxxx, Xxxxxxxxx, U.K., has certain new and useful formulas, processes,
discoveries, improvements, ideas and works of authorship (“Inventions”)
disclosed in an application for United States and other Letters Patent entitled
_________________________________________________________________________________
and executed by __________________________________________________ on date
herewith;
AND
WHEREAS
Coda
Octopus Group, Inc., located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx and or
a
subsidiary thereof, together with any successors, legal representatives or
assigns thereof, called "Assignee" wants to acquire the entire right, title
and
interest in and to said Inventions and application.
NOW,
THEREFORE,
in
consideration of the entering into an Director’s Contract with Assignee dated
January 26th, 2005 and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Assignor has sold, assigned, transferred
and
set over, and does hereby sell, assign, transfer and set over to Assignee the
entire right, title and interest in and to said Inventions, and said application
and all divisions and continuations thereof, and all United States Letters
Patents which may be granted thereon and all reissues, reexaminations and
extensions thereof, and all priority rights under all available International
Agreements, Treaties and Conventions for the protection of Intellectual property
in its various forms in every participating country, and all applications for
patents (including related rights such as utility-model registrations,
inventor's certificates, and the like) heretofore or hereafter filed for said
Inventions in any foreign countries, and all patents (including all
continuations, divisions, extensions, renewals, substitutes, and reissues
thereof) granted for said Inventions in any foreign countries; and the Assignor
hereby authorizes and requests the United States Commissioner of Patents and
Trademarks, and any officials of foreign countries whose duty it is to issue
patents on applications as aforesaid, to Issue all patents for said Inventions
to Assignee in accordance with the terms of this Assignment;
AND
THE
ASSIGNOR HEREBY
covenants that he has full right to convey the entire Interest herein assigned,
and that he has not executed, and will not execute, any agreement in conflict
herewith;
AND
THE
ASSIGNOR HEREBY
further
covenants and agrees that he will communicate to Assignee any facts known to
him
respecting said Inventions, and testify in any legal proceeding, sign all lawful
papers, execute all divisional, continuation, substitute and reissue
applications, make all rightful oaths and generally do everything possible
to
aid Assignee to obtain and enforce proper patent protection for said Inventions
in all countries.
10
In
testimony whereof, I hereunto set my hand this ____ day of _______________
20____
SIGNATURE
OF ASSIGNOR
STATE
OF
________________________________________
COUNTY
OF
______________________________________
On
_____________________ before me _________________________ Notary Public,
personally appeared _______________________________ personally known to me
(or
proved to me on the basis of satisfactory evidence) to be the person whose
name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
Instrument.
WITNESS
my hand and official seal.
_____________________________
Signature
of Notary
00
XXXXXXXX
X
INDEMNITY
AGREEMENT
This
Agreement is made as of the 26th
day of
January 2005, by and between Coda Octopus Group, Inc., a Delaware corporation
(the “Corporation”), and Xxxxxx Xxxxxxx (the “Indemnitee”), a Director and/or
Officer of the Corporation (collectively the "Parties").
WHEREAS,
it is
essential to the Corporation to retain and attract as Directors and Officers
the
most capable persons available, and
WHEREAS,
the
substantial increase in corporate litigation subjects Directors and Officers
to
expensive litigation risks at the same time that the availability of Directors’
and Officers’ liability insurance has been severely limited, and
WHEREAS,
it is
now and has always been the express policy of the Corporation to indemnify
its
Directors and Officers so as to provide them with the maximum possible
protection permitted by law, and
WHEREAS,
the
Corporation does not regard the protection available to Indemnitee as adequate
in the present circumstances, and realizes that Indemnitee may not be willing
to
serve as a Director and/or Officer without adequate protection, and the
Corporation desires Indemnitee to serve in such capacity;
NOW,
THEREFORE,
in
consideration of Indemnitee’s service as a Director and/or Officer after the
date hereof, the Parties agree as follows:
|
1.
|
Definitions.
As used in this Agreement:
|
|
(a)
|
The
term “Proceeding” shall include any threatened, pending or completed
action, suit or proceeding, whether brought by or in the right of
the
Corporation or otherwise and whether of a civil, criminal, administrative
or investigative nature.
|
|
(b)
|
The
term “Expenses” shall include, but is not limited to, expenses of
investigations, judicial or administrative proceedings or appeals,
damages, judgments, fines, amounts paid in settlement by or on behalf
of
Indemnitee, attorneys’ fees and disbursements and any expenses of
establishing a right to indemnification under this
Agreement.
|
|
(c)
|
The
terms “Director” and “Officer” shall include Indemnitee’s service at the
request of the Corporation as a director, officer, employee or agent
of
another corporation, partnership, joint venture, trust or other enterprise
as well as a Director and/or Officer of the Corporation.
|
|
2.
|
Indemnity
of Director or Officer.
Subject only to the limitations set forth in Section 3, Corporation
will
pay on behalf of the Indemnitee all Expenses actually and reasonably
incurred by Indemnitee because of any claim or claims made against
him in
a Proceeding by reason of the fact that he is or was a Director and/or
Officer.
|
12
|
3.
|
Limitations
on Indemnity.
Corporation shall not be obligated under this Agreement to make any
payment of Expenses to the
Indemnitee,
|
|
(a)
|
which
payment it is prohibited by applicable law from paying as
indemnity;
|
|
(b)
|
for
which payment is actually made to the Indemnitee under an insurance
policy, except in respect of any excess beyond the amount of payment
under
such insurance;
|
|
(c)
|
for
which payment the Indemnitee is indemnified by Corporation otherwise
than
pursuant to this Agreement;
|
|
(d)
|
resulting
from a claim decided in a Proceeding adversely to the Indemnitee
based
upon or attributable to the Indemnitee gaining in fact any personal
profit
or advantage to which he was not legally
entitled;
|
|
(e)
|
resulting
from a claim decided in a Proceeding adversely to the Indemnitee
for an
accounting of profits made from the purchase or sale by the Indemnitee
of
securities of Corporation within the meaning of Section 16(b) of
the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any state statutory law or common law;
or
|
|
(f)
|
brought
about or contributed to by the dishonesty of the Indemnitee seeking
payment hereunder; however, notwithstanding the foregoing, the Indemnitee
shall be indemnified under this Agreement as to any claims upon which
suit
may be brought against him by reason of any alleged dishonesty on
his
part, unless it shall be decided in a Proceeding that he committed
(i)
acts of active and deliberate dishonesty, (ii) with actual dishonest
purpose and intent, and (iii) which acts were material to the cause
of
action so adjudicated.
|
|
For
purposes of Sections 3 and 4, the phrase “decided in a Proceeding” shall
mean a decision by a court, arbitrator(s), hearing officer or other
judicial agent having the requisite legal authority to make such
a
decision, which decision has become final and from which no appeal
or
other review proceeding is
permissible.
|
|
4.
|
Advance
Payment of Costs.
Expenses incurred by Indemnitee in defending a claim against him
in a
Proceeding shall be paid by the Corporation as incurred and in advance
of
the final disposition of such Proceeding; provided, however, that
Expenses
of defense need not be paid as incurred and in advance where the
judicial
agent of first impression has decided the Indemnitee is not entitled
to be
indemnified pursuant to this Agreement or otherwise. Indemnitee hereby
agrees and undertakes to repay such amounts advanced if it shall
be
decided in a Proceeding that he is not entitled to be indemnified
by the
Corporation pursuant to this Agreement or
otherwise.
|
|
5.
|
Enforcement.
If a claim under this Agreement is not paid by Corporation, or on
its
behalf, within thirty days after a written claim has been received
by
Corporation, the Indemnitee may at any time thereafter bring suit
against
Corporation to recover the unpaid amount of the claim and if successful
in
whole or in part, the Indemnitee shall also be entitled to be paid
the
Expenses of prosecuting such claim.
|
13
|
6.
|
Subrogation.
In the event of payment under this Agreement, Corporation shall be
subrogated to the extent of such payment to all of the rights of
recovery
of the Indemnitee, who shall execute all papers required and shall
do
everything that may be necessary to secure such rights, including
the
execution of such documents necessary to enable Corporation effectively
to
bring suit to enforce such rights.
|
|
7.
|
Notice.
The Indemnitee, as a condition precedent to his right to be indemnified
under this Agreement, shall give to Corporation notice in writing
as soon
as practicable of any claim made against him for which indemnity
will or
could be sought under this Agreement. Notice to Corporation shall
be given
at its principal office and shall be directed to the Corporate Secretary
(or such other address as Corporation shall designate in writing
to the
Indemnitee); notice shall be deemed received if sent by prepaid mail
properly addressed, the date of such notice being the date postmarked.
In
addition, the Indemnitee shall give Corporation such information
and
cooperation as it may reasonably
require.
|
|
8.
|
Saving
Clause.
If this Agreement or any portion thereof shall be invalidated on
any
ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee to the full extent permitted by
any
applicable portion of this Agreement that shall not have been invalidated
or by any other applicable law.
|
|
9.
|
Indemnification
Hereunder Not Exclusive.
Nothing herein shall be deemed to diminish or otherwise restrict
the
Indemnitee’s right to indemnification under any provision of the
Certificate of Incorporation or Bylaws of the Corporation or under
Delaware law.
|
|
10.
|
Applicable
Law.
This Agreement shall be governed by and construed in accordance with
internal laws of the State of
Delaware.
|
|
11.
|
Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which shall constitute the
original.
|
|
12.
|
Successors
and Assigns.
This Agreement shall be binding upon the Corporation and its successors
and assigns.
|
|
13.
|
Continuation
of Indemnification.
The indemnification under this Agreement shall continue as to Indemnitee
even though he may have ceased to be a Director and/or Officer and
shall
inure to the benefit of the heirs and personal representatives of
Indemnitee.
|
|
14.
|
Coverage
of Indemnification.
The indemnification under this Agreement shall cover Indemnitee’s service
as a Director and/or Officer prior to or after the date of the
Agreement.
|
IN
WITNESS WHEREOF,
the
Parties have caused this Agreement to be duly executed and signed as of the
day
and year first above written.
| CODA OCTOPUS GROUP, INC. | INDEMNITEE |
| By: _______________________ | |
| Name: ____________________ | _________________________ |
| Position: __________________ | Print Name: Xxxxxx Xxxxxxx |
14
