INDEMNIFICATION AGREEMENT
Exhibit
10.5
This
Indemnification Agreement (this “Agreement”),
dated
as of the 4th
day
of
February,
2008 is
made by and between XXXXX TECHNOLOGY GROUP LIMITED, a Nevada corporation (the
“Company”),
and
Xxxxxx
Xxxx,
an
independent director of the Company (the “Indemnitee”).
RECITALS
A. The
Company and the Indemnitee recognize that the present state of the law is too
uncertain to provide the Company’s officers and directors with adequate and
reliable advance knowledge or guidance with respect to the legal risks and
potential liabilities to which they may become personally exposed as a result
of
performing their duties for the Company;
B. The
Company and the Indemnitee are aware of the substantial growth in the number
of
lawsuits filed against corporate officers and directors in connection with
their
activities in such capacities and by reason of their status as
such;
C. The
Company and the Indemnitee recognize that the cost of defending against such
lawsuits, whether or not meritorious, is typically beyond the financial
resources of most officers and directors of the Company;
D. The
Company and the Indemnitee recognize that the legal risks and potential
liabilities, and the threat thereof, associated with proceedings filed against
the officers and directors of the Company bear no reasonable relationship to
the
amount of compensation received by the Company’s officers and
directors;
E. The
Company, after reasonable investigation prior to the date hereof, has determined
that the liability insurance coverage available to the Company as of the date
hereof is inadequate, unreasonably expensive or both. The Company believes,
therefore, that the interest of the Company and its current and future
stockholders would be best served by a combination of (i) such insurance as
the
Company may obtain pursuant to the Company’s obligations hereunder and (ii) a
contract with its officers and directors, including the Indemnitee, to indemnify
them to the fullest extent permitted by law (as in effect on the date hereof,
or, to the extent any amendment may expand such permitted indemnification,
as
hereafter in effect) against personal liability for actions taken in the
performance of their duties to the Company;
F. Section
78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify
their officers and directors and further states that the indemnification
provided by Section 78.7502 shall not be deemed exclusive of any other rights
to
which those seeking
indemnification may be entitled under the articles of incorporation or any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office; thus, Section 78.7502 does not by itself limit the
extent to which the Company may indemnify persons serving as its officers and
directors;
G. The
Company’s Articles of Incorporation and Bylaws authorize the indemnification of
the officers and directors of the Company in excess of that expressly permitted
by Section 78.7502;
H. The
Board
of Directors of the Company has concluded that, to retain and attract talented
and experienced individuals to serve as officers and directors of the Company
and to encourage such individuals to take the business risks necessary for
the
success of the Company, it is necessary for the Company to contractually
indemnify its officers and directors, and to assume for itself liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company, and has further
concluded that the failure to provide such contractual indemnification could
result in great harm to the Company and its stockholders;
I. The
Company desires and has requested the Indemnitee to serve or continue to serve
as a director or officer of the Company, free from undue concern for the risks
and potential liabilities associated with such services to the Company;
and
J. The
Indemnitee is willing to serve, or continue to serve, the Company, provided,
and
on the expressed condition, that the Indemnitee is furnished with the
indemnification provided for herein.
AGREEMENT
NOW,
THEREFORE, the Company and Indemnitee agree as follows:
1. DEFINITIONS.
(a) “EXPENSES”
means, for the purposes of this Agreement, all direct and indirect costs of
any
type or nature whatsoever (including, without limitation, any fees and
disbursements of Indemnitee’s counsel, accountants and other experts and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, preparation, defense or appeal of a
Proceeding; provided, however, that Expenses shall not include judgments, fines,
penalties or amounts paid in settlement of a Proceeding.
(b) “PROCEEDING”
means, for the purposes of this Agreement, any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative
(including an action brought by or in the right of the Company) in which
Indemnitee may be or may have been involved as a party or otherwise, by reason
of the fact that Indemnitee is or was a director or officer of the Company,
by
reason of any action taken by Indemnitee or of any inaction on his or her part
while acting as such director or officer or by reason of the fact that he or
she
is or was serving at the request of the Company as a director, officer, employee
or agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a director or officer of the foreign or
domestic corporation which was a predecessor corporation to the Company or
of
another enterprise at the request of such predecessor corporation, whether
or
not he or she is serving in such capacity at the time any liability or expense
is incurred for which indemnification or reimbursement can be provided under
this Agreement.
2. AGREEMENT
TO SERVE.
Indemnitee
agrees to serve or continue to serve as a director or officer of the Company
to
the best of his or her abilities at the will of the Company or under separate
contract, if such contract exists, for so long as Indemnitee is duly elected
or
appointed and qualified or until such time as the Indemnitee tenders his or
her
resignation in writing. Nothing contained in this Agreement is intended to
create in Indemnitee any right to continued employment.
3. INDEMNIFICATION.
(a) THIRD
PARTY PROCEEDINGS. The Company shall indemnify Indemnitee against Expenses,
judgments, fines, penalties or amounts paid in settlement (if the settlement
is
approved in advance by the Company) actually and reasonably incurred by
Indemnitee in connection with a Proceeding (other than a Proceeding by or in
the
right of the Company) if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the Company,
and,
with respect to any criminal action or proceeding, had no reasonable cause
to
believe Indemnitee’s conduct was unlawful. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE
or
its equivalent, shall not, of itself, create a presumption that Indemnitee
did
not act in good faith and in a manner which Indemnitee reasonably believed
to be
in the best interests of the Company, or, with respect to any criminal
Proceeding, had no reasonable cause to believe that Indemnitee's conduct was
unlawful.
(b) PROCEEDINGS
BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted by law,
the
Company shall indemnify Indemnitee against Expenses and amounts paid in
settlement, actually and reasonably incurred by Indemnitee in connection with
a
Proceeding by or in the right of the Company to procure a judgment in its favor
if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in the best interests of the Company and its stockholders. Notwithstanding
the foregoing, no indemnification shall be made in respect of any claim, issue
or matter as to which Indemnitee shall have been adjudged liable to the Company
in the performance of Indemnitee’s duty to the Company and its stockholders
unless and only to the extent that the court in which such action or Proceeding
is or was pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for Expenses and then only to the extent that the court shall
determine.
(c) SCOPE.
Notwithstanding any other provision of this Agreement but subject to Section
14(b), the Company shall indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by other provisions of this Agreement, the Company’s Articles of
Incorporation, the Company’s Bylaws or by statute.
4. LIMITATIONS
ON INDEMNIFICATION.
Any
other
provision herein to the contrary notwithstanding, the Company shall not be
obligated pursuant to the terms of this Agreement:
(a) EXCLUDED
ACTS. To indemnify Indemnitee for any acts or omissions or transactions from
which a director may not be relieved of liability under applicable
law;
(b) EXCLUDED
INDEMNIFICATION PAYMENTS. To indemnify or advance Expenses in violation of
any
prohibition or limitation on indemnification under the statutes, regulations
or
rules promulgated by any state or federal regulatory agency having jurisdiction
over the Company;
(c) CLAIMS
INITIATED BY INDEMNITEE. To indemnify or advance Expenses to Indemnitee with
respect to Proceedings or claims initiated or brought voluntarily by Indemnitee
and not by way of defense, except with respect to Proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 78.7502 of the
Nevada Revised Statutes, but such indemnification or advancement of Expenses
may
be provided by the Company in specific cases if the Board of Directors has
approved the initiation or bringing of such suit;
(d) 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;
(e) INSURED
CLAIMS. To indemnify Indemnitee for Expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties, and amounts paid in settlement) which have been paid directly
to
or on behalf of Indemnitee by an insurance carrier under a policy of directors’
and officers’ liability insurance maintained by the Company or any other policy
of insurance maintained by the Company or Indemnitee; or
(f) 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.
5. DETERMINATION
OF RIGHT TO INDEMNIFICATION.
Upon
receipt of a written claim addressed to the Board of Directors for
indemnification pursuant to Section 3, the Company shall determine by any of
the
methods set forth in Section 78.751 of the Nevada Revised Statutes whether
Indemnitee has met the applicable standards of conduct which makes it
permissible under applicable law to indemnify Indemnitee. If a claim under
Section 3 is not paid in full by the Company within ninety (90) days after
such
written claim has been received by the Company, the Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim and, unless such action is dismissed by the court as frivolous or brought
in bad faith, the Indemnitee shall be entitled to be paid also the expense
of
prosecuting such claim. The court in which such action is brought shall
determine whether Indemnitee or the Company shall have the burden of proof
concerning whether Indemnitee has or has not met the applicable standard of
conduct.
6. ADVANCEMENT
AND REPAYMENT OF EXPENSES.
Subject
to Section 4 hereof, the Expenses incurred by Indemnitee in defending and
investigating any Proceeding shall be paid by the Company in advance of the
final disposition of such Proceeding within 30 days after receiving from
Indemnitee the copies of invoices presented to Indemnitee for such Expenses,
if
Indemnitee shall provide an undertaking to the Company to repay such amount
to
the extent it is ultimately determined that Indemnitee is not entitled to
indemnification. In determining whether or not to make an advance hereunder,
the
ability of Indemnitee to repay shall not be a factor. Notwithstanding the
foregoing, in a proceeding brought by the Company directly, in its own right
(as
distinguished from an action bought derivatively or by any receiver or trustee),
the Company shall not be required to make the advances called for hereby if
the
Board of Directors determines, in its sole discretion, that it does not appear
that Indemnitee has met the standards of conduct which make it permissible
under
applicable law to indemnify Indemnitee and the advancement of Expenses would
not
be in the best interests of the Company and its stockholders.
7. PARTIAL
INDEMNIFICATION.
If
the
Indemnitee is entitled under any provision of this Agreement to indemnification
or advancement by the Company of some or a portion of any Expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, penalties, and amounts paid in settlement) incurred by him in the
investigation, defense, settlement or appeal of a Proceeding, but is not
entitled to indemnification or advancement of the total amount thereof, the
Company shall nevertheless indemnify or pay advancements to the Indemnitee
for
the portion of such Expenses or liabilities to which the Indemnitee is entitled.
8. NOTICE
TO
COMPANY BY INDEMNITEE.
Indemnitee
shall notify the Company in writing of any matter with respect to which
Indemnitee intends to seek indemnification hereunder as soon as reasonably
practicable following the receipt by Indemnitee of written notice thereof;
provided, however, that any delay in so notifying the Company shall not
constitute a waiver by Indemnitee of her rights hereunder. The written
notification to the Company shall be addressed to the Board of Directors and
shall include a description of the nature of the Proceeding and the facts
underlying the Proceeding and be accompanied by copies of any documents filed
with the court in which the Proceeding is pending. In addition, Indemnitee
shall
give the Company such information and cooperation as it may reasonably require
and as shall be within Indemnitee’s power.
9. MAINTENANCE
OF LIABILITY INSURANCE.
(a) Subject
to Section 4 hereof, the Company hereby agrees that so long as Indemnitee shall
continue to serve as a director or officer of the Company and thereafter so
long
as Indemnitee shall be subject to any possible Proceeding, the Company, subject
to Section 9(b), shall use reasonable commercial efforts to obtain and maintain
in full force and effect directors’ and officers’ liability insurance
(“D&O
Insurance”)
which
provides Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company’ 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.
(b) Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain
D&O Insurance if the Company determines in good faith that such insurance is
not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, the coverage provided
by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.
(c) If,
at
the time of the receipt of a notice of a claim pursuant to Section 8 hereof,
the
Company has D&O 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.
10. DEFENSE
OF CLAIM.
In
the
event that the Company shall be obligated under Section 6 hereof to pay the
Expenses of any Proceeding against Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such Proceeding, with counsel
approved by Indemnitee, which approval shall not be unreasonably withheld,
upon
the delivery to Indemnitee of written notice of its election to do so. 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 Proceeding, provided that (i) Indemnitee
shall have the right to employ counsel in any such Proceeding at Indemnitee’s
expense; and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, or (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
the
Indemnitee in the conduct of such defense or (C) the Company shall not, in
fact,
have employed counsel to assume the defense of such Proceeding, then the fees
and expenses of Indemnitee’s counsel shall be at the expense of the
Company.
11. ATTORNEYS'
FEES.
In
the
event that Indemnitee or the Company institutes an action to enforce or
interpret any terms of this Agreement, the Company shall reimburse Indemnitee
for all of the Indemnitee’s reasonable fees and expenses in bringing and
pursuing such action or defense, unless as part of such action or defense,
a
court of competent jurisdiction determines that the material assertions made
by
Indemnitee as a basis for such action or defense were not made in good faith
or
were frivolous.
12. CONTINUATION
OF OBLIGATIONS.
All
agreements and obligations of the Company contained herein shall continue during
the period the Indemnitee is a director or officer of the Company, or is or
was
serving at the request of the Company as a director, officer, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise, and shall continue thereafter so long as the Indemnitee shall
be subject to any possible proceeding by reason of the fact that Indemnitee
served in any capacity referred to herein.
13. SUCCESSORS
AND ASSIGNS.
This
Agreement establishes contract rights that shall be binding upon, and shall
inure to the benefit of, the successors, assigns, heirs and legal
representatives of the parties hereto.
14. NON-EXCLUSIVITY.
(a) The
provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed to be exclusive of any other rights that the
Indemnitee may have under any provision of law, the Company’s Articles of
Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested
directors, other agreements or otherwise, both as to action in the Indemnitee’s
official capacity and action in another capacity while occupying the
Indemnitee’s position as a director or officer of the Company.
(b) In
the
event of any changes, after the date of this Agreement, in any applicable law,
statute, or rule which expand the right of a Nevada corporation to indemnify
its
officers and directors, the Indemnitee's rights and the Company’s obligations
under this Agreement shall be expanded to the full extent permitted by such
changes. In the event of any changes in any applicable law, statute or rule,
which narrow the right of a Nevada corporation to indemnify a director or
officer, such changes, 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.
15. EFFECTIVENESS
OF AGREEMENT.
To
the
extent that the indemnification permitted under the terms of certain provisions
of this Agreement exceeds the scope of the indemnification provided for in
the
Nevada Revised Statutes, such provisions shall not be effective unless and
until
the Company’s Articles of Incorporation authorize such additional rights of
indemnification. In all other respects, the balance of this Agreement shall
be
effective as of the date set forth on the first page and may apply to acts
of
omissions of Indemnitee which occurred prior to such date if Indemnitee was
an
officer, director, employee or other agent of the Company, 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, at the
time
such act or omission occurred.
16. SEVERABILITY.
Nothing
in this Agreement is intended to require or shall be construed as requiring
the
Company to do or fail to do any act in violation of applicable law. The
Company’s inability, pursuant to court order, to perform its obligations under
this Agreement shall not constitute a breach of this Agreement. The provisions
of this Agreement shall be severable as provided in this Section 16. If this
Agreement or any portion hereof shall be invalidated on any ground by any court
of competent jurisdiction, then the Company shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its
terms.
17.
GOVERNING LAW.
This
Agreement shall be interpreted and enforced in accordance with the laws of
the
State of Nevada, without reference to its conflict of law principals. To the
extent permitted by applicable law, the parties hereby waive any provisions
of
law which render any provision of this Agreement unenforceable in any respect.
18. NOTICE.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement, or as subsequently modified by written
notice.
19. MUTUAL
ACKNOWLEDGMENT.
Both
the
Company and Indemnitee acknowledge that in certain instances, federal law or
applicable public policy may prohibit the Company from indemnifying its
directors and officers 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 appropriate state or federal regulatory agency
to
submit for approval any request for indemnification, and has undertaken or
may
be required in the future to undertake with the Securities and Exchange
Commission to 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.
20. COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
21. AMENDMENT
AND TERMINATION.
No
amendment, modification, termination or cancellation of this Agreement shall
be
effective unless in writing signed by both parties hereto.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
set forth above.
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INDEMNITEE:
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XXXXX
TECHNOLOGY GROUP LIMITED
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By:
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/s/
Liuhua Guo
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By:
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/s/
Xxxxxx Xxxx
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Name:
Liuhua Guo
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Xxxxxx
Xxxx
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Title:
Chief Executive Officer
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Address:
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Xx.
0 Xxxxx Xxxx
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Address:
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Xxxxxxxx
Xxxxxxxxxx Xxxx
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Xxxxxxxx,
Xxxxx 000000
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