EXHIBIT A INDEMNIFICATION AGREEMENT

Exhibit 10.4

EXHIBIT A

This Indemnification Agreement (the “Agreement”) is made as of this 1st day of November 2002 by and between XXXX.xxx, Inc., a California corporation (the “Company”), and Xxxxx Xxxxxxx, an individual (“Xx. Xxxxxxx”), with respect to the following facts:

R E C I T A L S

A. Xx. Xxxxxxx serves as Chairman of the Board of Directors, Chief Executive Officer, and President of the Company.

B. The Company values the services of Xx. Xxxxxxx and desires to retain those services.

C. The Company and Xx. Xxxxxxx recognize the increasing difficulty in obtaining liability insurance for directors, officers, employees, and agents, the significant increases in the cost of such insurance, and the general reductions in the coverage of such insurance.

D. The Company and Xx. Xxxxxxx further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, and agents to expensive litigation risk at the same time that the availability and coverage of liability insurance has been severely limited.

E. Xx. Xxxxxxx does not regard the current protection available as adequate under the present circumstances, and Xx. Xxxxxxx and other directors, officers, employees, and agents of the Company may not be willing to continue to serve as directors, officers, employees, and agents without additional protection.

F. The Company desires to attract and retain the services of highly qualified individuals, such as Xx. Xxxxxxx, to serve as directors, officers, employees, and agents of the Company and to indemnify its directors, officers, employees, and agents so as to provide them with the maximum protection permitted by law.

G. The Company’s Board of Directors has adopted resolutions approving the indemnification of officers, directors, employees, and agents by the Company to the extent permitted by California General Corporation Law.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, THE PARTIES HERETO AGREE AS FOLLOWS:

1. Indemnification of Xx. Xxxxxxx for Actions by Third Parties

employee, or agent of the Company, or any subsidiary of the Company, to the extent permitted by California General Corporation Law. As part of this indemnification agreement, the Company agrees to advance reasonable legal fees and costs to Xx. Xxxxxxx as they are incurred for any actions for which the Company is obligated to indemnify Xx. Xxxxxxx pursuant to the terms of this Agreement. Xx. Xxxxxxx hereby undertakes to repay such amounts advanced only if, and to the extent that, it is ultimately determined that Xx. Xxxxxxx is not entitled to be indemnified by the Company. The advances to be made hereunder will be paid by the Company to Xx. Xxxxxxx within 30 days following delivery of a written request by Xx. Xxxxxxx to the Company. If the Company provides a defense for Xx. Xxxxxxx at its expense pursuant to Section 1 of this Agreement and there is no conflict of interest, then Xx. Xxxxxxx may not seek indemnification from the Company for the fees or costs of any separate counsel which he may engage. If there is a conflict of interest under those circumstances, then Xx. Xxxxxxx may retain separate counsel reasonably satisfactory to the Company and the Company will advance the reasonable legal fees and costs incurred by Xx. Xxxxxxx in such actions if they are covered by the Company’s indemnification obligation under this Agreement.

2. Indemnification of Xx. Xxxxxxx for Actions in the Right of the Company

The Company hereby agrees to indemnify and hold Xx. Xxxxxxx harmless from any liability, claims, damages, losses, expenses, judgments or settlements incurred by him, including but not limited to reasonable attorneys’ fees and costs incurred by him and advanced by the Company as they are incurred, resulting from Xx. Xxxxxxx being made a party to, or being threatened to be made a party to, any proceeding by or in the right of the Company to procure a judgment in its favor by reason of any action taken by Xx. Xxxxxxx as an officer, director or agent of the Company, provided that Xx. Xxxxxxx acted in good faith in a manner he reasonably believed to be in the best interests of the Company and its shareholders; provided further, that such indemnification will be coextensive with and not beyond the scope of the indemnification permitted by California General Corporation Law. As part of this indemnification agreement, the Company agrees to advance reasonable legal fees and costs to Xx. Xxxxxxx as they are incurred for any actions for which the Company is obligated to indemnify Xx. Xxxxxxx pursuant to the terms of this Agreement. Xx. Xxxxxxx hereby undertakes to repay such amounts advanced only if, and to the extent that, it is ultimately determined that Xx. Xxxxxxx is not entitled to be indemnified by the Company. The advances to be made hereunder will be paid by the Company to Xx. Xxxxxxx within 30 days following delivery of a written request by Xx. Xxxxxxx to the Company.

3. Indemnification for Serving as a Witness

Notwithstanding any other provision of this Agreement, to the extent that Xx. Xxxxxxx is, by reason of Xx. Xxxxxxx’x status as a director, officer, employee, or agent of the Company, a witness in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, Xx. Xxxxxxx shall be indemnified against expenses actually and reasonably incurred by him in connection therewith. The advances to be made hereunder will be paid by the Company to Xx. Xxxxxxx within 30 days following delivery of a written request by Xx. Xxxxxxx to the Company.

4. Cooperation by Xx. Xxxxxxx

Xx. Xxxxxxx will, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice, in accordance with Section 10 of this Agreement, of any claim made against Xx. Xxxxxxx for which indemnification will or could be sought under this Agreement. Notice to the Company will be directed to the President of the Company.

Additionally, Xx. Xxxxxxx must give the Company such information and cooperation as is within Xx. Xxxxxxx’x power as the Company may reasonably require.

5. Notice to Insurers

If, at the time of the receipt of a notice of a claim pursuant to Section 4 of this Agreement, the Company has director and officer liability insurance in effect, the Company will 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 will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Xx. Xxxxxxx, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

6. Additional Indemnification Rights

6.1 Scope

Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Xx. Xxxxxxx 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 Articles of Incorporation, the Company’s Bylaws, or by statute. In the event of any change in any applicable law, statute, or rule which narrows the right of a California corporation to indemnify a member of its board of directors or its officers, employees, or agents, such change, to the extent not otherwise required by such law, statute, or rule to be applied to this Agreement, will have no effect on this Agreement or the parties’ rights and obligations under this Agreement.

6.2 Nonexclusivity

The indemnification provided by this Agreement will not be deemed exclusive of any rights to which Xx. Xxxxxxx may be entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of shareholders or disinterested directors, the laws of the state of California, or otherwise, both as to action in Xx. Xxxxxxx’x official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement will continue as to Xx. Xxxxxxx for any action taken or not taken while serving in an indemnified capacity, even though he may have ceased to serve in such capacity at the time of any action, suit, or other covered proceeding.

7. Partial Indemnification

If Xx. Xxxxxxx is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines, or penalties actually or reasonably incurred by him in the investigation, defense, appeal, or settlement of any civil or criminal action, suit, or proceeding, but not, however, for the total amount thereof, the Company will nevertheless indemnify Xx. Xxxxxxx for the portion of such expenses, judgments, fines, or penalties to which Xx. Xxxxxxx is entitled.

8. Exceptions

Notwithstanding any other provision of this Agreement, the Company is not obligated pursuant to the terms of this Agreement:

(a) to indemnify or advance expenses to Xx. Xxxxxxx with respect to the proceedings or claims initiated or brought voluntarily by Xx. Xxxxxxx and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement;

(b) to indemnify or advance expenses to Xx. Xxxxxxx with respect to the any proceeding instituted by Xx. Xxxxxxx to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Xx. Xxxxxxx in such proceeding was not made in good faith or was frivolous;

(c) to indemnify Xx. Xxxxxxx for expenses or liabilities of any type whatsoever which have been paid directly to Xx. Xxxxxxx by an insurance carrier under a policy of officers’ and directors’ liability insurance or other policy of insurance maintained by the Company;

(d) to indemnify Xx. Xxxxxxx for expenses or payment of profits arising from the purchase and sale by Xx. Xxxxxxx of securities in violation of Section 16(b) of the Securities and Exchange Act of 1934, as amended, or any similar successor statute;

(e) to indemnify Xx. Xxxxxxx in any manner which is contrary to public policy or which a court of competent jurisdiction has finally determined to be unlawful;

(f) to indemnify Xx. Xxxxxxx for liabilities in excess of the total amount at which settlement reasonably could have been made, or for any cost or expense incurred by Xx. Xxxxxxx following the time such settlement reasonably could have been effected, if Xx. Xxxxxxx unreasonably delayed, refused, or failed to enter into a settlement of any action, suit, or proceeding (or investigation or appeal thereof) recommended in good faith, in writing, by the Company; or

(g) to indemnify Xx. Xxxxxxx for any breach by Xx. Xxxxxxx of any employment agreement between Xx. Xxxxxxx and the Company or any of its subsidiaries.

9. Directors’ and Officers’ Liability Insurance

The Company will, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors, officers, employees, and agents of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. In all such policies of liability insurance, Xx. Xxxxxxx will be named as an insured in such manner as to provide Xx. Xxxxxxx the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Xx. Xxxxxxx is a director; or of the Company’s officers; if Xx. Xxxxxxx is not a director of the Company but is an officer, or of the Company’s employees, if Xx. Xxxxxxx is not a director or officer but is an employee; or of the Company’s agents, if Xx. Xxxxxxx is not a director, officer, or employee but is an agent. Notwithstanding the foregoing, the Company has no obligation to obtain or maintain

such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Xx. Xxxxxxx is covered by similar insurance maintained by a subsidiary or parent of the Company.

10. Notice

Notice will deemed to be given by one party to the other parties of this Agreement upon personal delivery by messenger, air courier, express mail or certified registered mail, return receipt requested, or upon facsimile or telegram, or three days after mailing by first class mail by the party giving the notice, addressed to the parties as follows, or to any other address or facsimile numbers provided to the parties in writing in accordance with this Agreement by the party making the change:

If to the Company:		XXXX.xxx, Inc.
		0000 Xxxxxxx Xxxxx
		Xxxxxx Xxxx, Xxxxxxxxxx 00000

		Attention: Xxxxx Xxxxxxx, President

If to Xx. Xxxxxxx:		The address of Xx. Xxxxxxx listed below
		Xx. Xxxxxxx’x signature to this Agreement.

11. Injunctive Relief

11.1 Damages Inadequate

Each party acknowledges that it would be impossible to measure in money the damages to the other party if there is a failure to comply with any covenants and provisions of this Agreement, and agrees that in the event of any breach of any covenant or provision, the other party to this Agreement will not have an adequate remedy at law.

11.2 Injunctive Relief

It is therefore agreed that the other party to this Agreement who is entitled to the benefit of the covenants and provisions of this Agreement which have been breached, in addition to any other rights or remedies which they may have, shall be entitled to immediate injunctive relief to enforce such covenants and provisions, and that in the event that any such action or proceeding is brought in equity to enforce them, the defaulting or breaching party will not urge as a defense that there is an adequate remedy at law.

12. Waivers

If any party shall at any time waive any rights hereunder resulting from any breach by the other party of any of the provisions of this Agreement, such waiver is not to be construed as a continuing waiver of other breaches of the same or other provisions of this Agreement. Resort to any remedies referred to herein shall not be construed as a waiver of any other rights and remedies to which such party is entitled under this Agreement or otherwise.

13. Successors and Assigns

Each covenant and representation of this Agreement shall inure to the benefit of and be binding upon each of the parties, their personal representatives, attorneys, agents, assigns and other successors in interest.

14. Attorneys’ Fees

In the event that either party must resort to legal action in order to enforce the provisions of this Agreement or to defend such action, the prevailing party shall be entitled to receive reimbursement from the nonprevailing party for all reasonable attorney’s fees and all other costs incurred in commencing or defending such action, or in enforcing this Agreement, including but not limited to post judgement costs.

15. Entire and Sole Agreement

This Agreement constitutes the entire agreement between the parties and supersedes all agreements, representations, warranties, statements, promises and undertakings, whether oral or written, with respect to the subject matter of this Agreement. This Agreement may be modified only by a written agreement signed by all parties.

16. Governing Law

This Agreement shall be construed as a whole and in accordance with its fair meaning. This Agreement shall be interpreted in accordance with the laws of the State of Los Angeles, and venue for any action or proceedings brought with respect to this Agreement shall be in the County of Los Angeles in the State of California.

17. Severability

The provisions of this Agreement are meant to be enforced severally so that the determination that one or more provisions are unenforceable or invalid shall not affect or render invalid any other provision of this Agreement, and such other provisions shall continue to be in full force in accordance with their terms.

18. Rights Cumulative

All rights and remedies under this Agreement are cumulative, and none is intended to be exclusive of another. No delay or omission in insisting upon the strict observance of performance of any provision of this Agreement, or in exercising any right or remedy, shall be construed as a waiver or relinquishment of such provision, nor shall it impair such right or remedy. Every right and remedy may be exercised from time to time and as often as deemed expedient.

19. Captions

The paragraph and other headings contained in this Agreement are for reference purposes only, and shall not limit or otherwise affect the meaning hereof.

20. Legal Holidays

In the case where the date on which any action required to be taken, document required to be delivered or payment required to be made is not a business day in San Diego, California, such action, delivery or payment need not be made on that date, but may be made on the next succeeding business day.

21. Counterparts

This Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

22. Parties

This Agreement shall inure solely to the benefit of and shall be binding upon the parties hereto and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision contained herein.

23. Authority

All signatories to this Agreement do hereby declare that they have the authority to execute this Agreement on behalf of the parties to this Agreement.

THE COMPANY:	XXXX.XXX, INC.


	By	/s/ Xxxxx Xxxxxxx
		Xxxxx Xxxxxxx, President


	By	/s/ Xxxxxx Xxxxxxx
		Xxxxxx Xxxxxxx, Secretary


XX. XXXXXXX:	By	/s/ Xxxxx Xxxxxxx
		Xxxxx Xxxxxxx

		00000 Xxx Xxxxx
		Xxxxxx Xxxxxxx

		Xxxxxx, XX 00000
		City, State, and Zip Code

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EXHIBIT A INDEMNIFICATION AGREEMENT

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