INDEMNIFICATION AGREEMENT
EXHIBIT
10.27
This INDEMNIFICATION AGREEMENT (the “Agreement”) is dated effective this
28th day of February, 2005, and is made by and among Virtual Alert, Inc.
(“Indemnitor”), and Xxxxx Xxxxx, an individual domiciled in the State of California, Xxxxxx
Xxxxxxx, an individual domiciled in the State of California, and Xxxx Xxxxxxx, an individual
domiciled in the State of Texas (herein, Xxxxx Xxxxx, Xxxxxx Xxxxxxx, and Xxxx Xxxxxxx shall be
referred to collectively as the “Indemnitees”).
RECITALS
A. Prior to the effectiveness of this Agreement, Indemnitees have been substantial
shareholders of the Indemnitor, Indemnitees have previously entered into that General Agreement of
Indemnity and the Rider thereto, dated August 5, 2004 (the “Bond Indemnity”) with Lexon
Insurance Company (“Lexon”) pursuant to which the Indemnitees agreed to guaranty to Lexon the
repayment of any sums that Lexon might be required to pay as surety on a performance bond posted
for the benefit of Indemnitor with the State of Tennessee relating to a contract between Indemnitor
and the State of Tennessee.
B. On even date herewith, Indemnitees are selling their shares of Indemnitor to GlobalSecure
Holdings, Ltd. (“Global”) pursuant to the terms of that certain Stock Purchase Agreement among
Indemnitiees and Global.
C. In order to induce the Indemnitees to enter into the Stock Purchase Agreement and to
consummate the transactions contemplated thereunder, Indemnitor (at the request of Global) and
Indemnitees desire to enter into this Agreement for Inemnitees to be indemnified, subject to the
conditions herein stated, for any losses which may be incurred by Indemnitee in connection with the
Bond Indemnity.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Indemnitor and Indemnitees agree as follows:
ARTICLE 1
AGREEMENT
1.1. Incorporation By Reference. The facts and circumstances referenced in the
Recitals are hereby incorporated herein by reference as if set forth in full.
1.2. Indemnification. Subject to Section 1.2.2, Indemnitor hereby agrees to indemnify
and hold Indemnitees harmless from and against any and all damages, liabilities, losses, costs and
expenses, including attorneys’ fees and costs, whether in tort, contract, statutory or otherwise
(collectively the “Damages”), sustained by Indemnitees as a result of or arising out of to the Bond
Indemnity.
1.2.1 Indemnification Procedures. All claims or demands for indemnification under
this section (“Claims”) shall be asserted and resolved as follows:
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(a) If any Indemnitee receives information that would reasonably lead Indemnitee to believe a
performance claim against the Bond Indemnity (herein, a “Bond Claim”) will be asserted,
such Indemnitee shall, within a reasonable time (but in no event more than 30 days from the date
any complaint is served on Indemnitee) notify the other Indemnitees and the Indemnitor of such
Claim (the “Claim Notice”). The Indemnitor shall have 30 days from date of delivery of the
Claim Notice to notify the Indemnitees whether the Indemnitor disputes liability to the Indemnitees
hereunder with respect to the Bond Claim, and, if so, the basis for such a dispute, and (if
applicable) whether Indemnitor elects to assume the defense of the Bond Claim.
(b) If Indemnitor does not dispute liability, Indemnitor shall be authorized, at the sole cost
and expense of the Indemnitor, to defend against the Bond Claim, provided that the Indemnitees are
hereby authorized (but not obligated) to file any motion, answer or other pleading and to take any
other action which the Indemnitees shall deem necessary or appropriate to protect the Indemnitees’
interests. The notice to assume control of the defense must be made at the same time the notice is
sent to Indemnitees as to acceptance or rejection of indemnification liability. If the Indemnitor
notifies the Indemnitees that the Indemnitor is controlling the defense of the Bond Claim,
Indemnitor shall be entitled to select counsel reasonably satisfactory to Indemnitees. Indemnitor
shall not settle the Bond Claim (in whole or in part) if such settlement does not include a
complete and unconditional release of the Indemnitees, unless the Indemnitees otherwise agree in
writing, which shall not be unreasonably withheld. If Indemnitor assumes the defense of the Bond
Claim, and the Indemnitees desire to participate in any such defense or settlement, the Indemnitees
may hire counsel to assist Indemnitees at their sole cost and expense.
(c) If the Indemnitor disputes indemnification liability, or otherwise elects not to assume
the defense of the Bond Claim, whether by failure of Indemnitor to give the Indemnitees timely
notice as provided herein or otherwise, then the Indemnitees, without waiving any rights against
Indemnitor, may settle or defend against such Bond Claim in the Indemnitees’ sole discretion. In
such event, Indemnitees shall be entitled to file an action against Indemnitor to recover from the
Indemnitor the amount of any settlement or judgment and, on an ongoing basis, all indemnifiable
costs and expenses of the Indemnitees with respect thereto, including attorneys’ fees and interest
from the date such costs and expenses were incurred. If such an action against Indemnitor is
filed, the prevailing party shall be entitled to attorneys’ fees and costs.
1.2.2 Limitation. Indemnitor’s obligation to indemnify shall not apply to any
situation where the Bond Claim results from any gross negligence or intentional misconduct of an
Indemnitee after the date hereof or if the Bond Claim is based on Indemnitor’s business operations
prior to the effective date of this Agreement. Indemnitor shall not be required to indemnify for
more than the limits provided under the Bond Indemnity. For example, not by way of limitation, if
any limitations available in the Rider to the Bond Indemnity apply, Indemnitor shall not be
required to make any indemnification in excess of such Rider.
1.3. Authority to Enter into Agreement. Each of the parties hereto represents and
warrants to each of the other parties, and declares under penalty of perjury, that each has full
power and authority to enter into this Agreement, and that none has assigned, conveyed, encumbered,
or in any manner transferred all or any portion of the claims covered by this Agreement. Each
party acknowledges and agrees that this warranty and representation is an
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essential material term of this Agreement, without which the consideration relating hereto
would not have been delivered by any party to any other party.
ARTICLE 2
MISCELLANEOUS
2.1. Term; Survival. The obligation to indemnify under this Agreement shall continue
until the expiration of the applicable statute of limitations period applicable to any Bond Claim.
2.2. Modification. This Agreement is entered into for the benefit of the parties
hereto and their respective successors and assigns, and cannot be amended or terminated except in a
writing signed by both parties.
2.3. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California. If any legal action is necessary to enforce the terms
and conditions of this Agreement, the parties hereby agree that the Superior Court of California,
County of Orange, shall be the sole venue and jurisdiction for the bringing of such action.
2.4. Severability. If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable the remainder of the
provisions shall remain in full force and effect and shall in no way be affected, impaired or
invalidated.
2.5. Entire Agreement. This Agreement contains the entire agreement of the parties
hereto and supersedes any prior written or oral agreement between them concerning the subject
matter contained herein.
2.6. Attorneys’ Fees. If any legal action is necessary to enforce the terms and
conditions of this Agreement, the prevailing party shall be entitled to recover all costs of suit
and reasonable attorneys’ fees as determined by the court.
2.7. Construction of Agreement. In determining the meaning of, or resolving any
ambiguity with respect to, any word, phrase or provision of this Agreement, no uncertainty or
ambiguity shall be construed or resolved against any party under any rule of construction,
including the party primarily responsible for the drafting and preparation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in one or more counterparts
which, taken together, shall constitute one agreement, which Agreement shall be effective as of and
on the date hereinabove set forth.
| INDEMNITEES: | ||||||
| /s/ Xxxxx Xxxxx | ||||||
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| Xxxxx Xxxxx | ||||||
| /s/ Xxxxxx Xxxxxxx | ||||||
| Xxxxxx Xxxxxxx | ||||||
| /s/ Xxxx Xxxxxxx | ||||||
| Xxxx Xxxxxxx | ||||||
| INDEMNITOR: | ||||||
| Virtual Alert, Inc. | ||||||
| a California corporation | ||||||
| BY: /s/ Xxxxx Xxxxxx | ||||||
| NAME: Xxxxx Xxxxxx | ||||||
| TITLE: Chief Executive Officer |
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