DIRECTOR AGREEMENT
This
DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of March 26,
2010 (the “Effective Date”), by and between Xxxxxx Online Entertainment Ltd.
(the “Company”), and Xxx Xxxxx (the “Director”).
WHEREAS,
the Company desires to engage the Director, and the Director desires to serve,
as a director and chairman of the Company, subject to the terms and conditions
contained in this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the receipt of which is hereby acknowledged, the Company and the
Director, intending to be legally bound, hereby agree as follows:
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1.
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DEFINITIONS.
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(a) “Corporate
Status” describes the capacity of the Director with respect to the Company and
the services performed by the Director in that capacity.
(b) “Entity”
shall mean any corporation, partnership, limited liability company, joint
venture, trust, foundation, association, organization or other legal
entity.
(c) “Proceeding”
shall mean any threatened, pending or completed claim, action, suit,
arbitration, alternate dispute resolution process, investigation, administrative
hearing, appeal, or any other proceeding, whether civil, criminal,
administrative or investigative, whether formal or informal, including a
proceeding initiated by the Director pursuant to Section 12 of this Agreement to
enforce the Director’s rights hereunder.
(d) “Expenses”
shall mean all reasonable fees, costs and expenses, approved by the Company in
advance and reasonably incurred in connection with any Proceeding, including,
without limitation, attorneys’ fees, disbursements and retainers, fees and
disbursements of expert witnesses, private investigators, professional advisors
(including, without limitation, accountants and investment bankers), court
costs, transcript costs, fees of experts, travel expenses, duplicating, printing
and binding costs, telephone and fax transmission charges, postage, delivery
services, secretarial services, and other disbursements and
expenses.
(e) “Liabilities”
shall mean judgments, damages, liabilities, losses, penalties, excise taxes,
fines and amounts paid in settlement.
(f) “Parent”
shall mean any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities ending with the Company, if
each of the corporations or entities, other than the Company, owns stock or
other interests possessing 50% or more of the economic interest or the total
combined voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.
(g) “Subsidiary”
shall mean any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities beginning with the Company, if
each of the corporations or entities, other than the last corporation or entity
in the unbroken chain, owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the
chain.
2. SERVICES
OF DIRECTOR. While this Agreement is in effect, the Director
shall perform duties as a Director and chairman of the Board and shall perform
duties as an
independent director of the Subsidiary upon request by the Company, be
compensated for such and
be reimbursed expenses in accordance with the Schedule A attached to this
Agreement, subject
to the following.
(a) The
Director will perform services as is consistent with Director’s position with
the Company, as required and authorized by the Memorandum of Association and
Articles of Association of the Company, and in accordance with high professional
and ethical standards and all applicable laws and rules and regulations
pertaining to the Director’s performance hereunder, including without
limitation, laws, rules and regulations relating to a public company. The
Director will also perform services as is consistent with Director’s position
with the Subsidiary, upon the request by the Company, and authorized by the
Memorandum of Association and Articles of Association of the Subsidiary, and in
accordance with high professional and ethical standards and all applicable laws
and rules and regulations pertaining to the Independent Director’s performance
hereunder.
(b) The
Director is solely responsible for taxes arising out of any compensation paid by
the Company to the Director under this Agreement, and the Director understands
that he/she may be issued a U.S. Treasury form 1099 for any compensation paid to
him/her by the Company, and understands and agrees that the Company shall comply
with any tax or
withholding obligations as required by applicable law from time to time in
connection with this Agreement.
(c) The
Company may offset any and all monies payable to the Director to the extent of
any monies owing to the Company from the Director.
(d) The
rules and regulations of the Company notified to the Director, from time to
time, apply to the Director. Such rules and regulations are subject to change by
the Company in its sole discretion. Notwithstanding the foregoing, in the event
of any conflict or inconsistency between the terms and conditions of this
Agreement and rules and regulations of the Company, the terms of this Agreement
control.
3. REQUIREMENTS
OF DIRECTOR. During the term of the Director’s services to the Company
hereunder, Director shall observe all applicable laws and regulations relating
to Directors of a public company as promulgated from to time.
4. REPORT
OBLIGATION. While this Agreement is in effect, the Director shall immediately
report to the Company in the event: (1) the Director knows or has reason to know
or should have known that the requirements specified in Section 3 hereof are not
satisfied or are
not going to be satisfied; and (2) the Director simultaneously serves on an
audit committee of any other public company.
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5. TERM
AND TERMINATION. The term of this Agreement and the Director’s
services hereunder shall be for one (1) year from the Effective Date, unless
terminated as
provided for in this Section 5. This Agreement and the Director’s services
hereunder shall terminate
upon the earlier of the following:
(a) Expiration
of the Director’s term as a director of the Company;
(b) Removal
of the Director as a director of the Company, upon proper Board or Shareholder
action in accordance with the Memorandum of Association and Articles of
Association of the Company and applicable law;
(c) Resignation
of the Director as a director of the Company upon written notice to the Board of
Directors of the Company;
(d) Such
time as when the Director ceases to be a member of the executive management of
Xxxxxx Information Technology (Beijing) Ltd., by removal, resignation or
otherwise; or
(e) Termination
of this Agreement by the Company, in the event any of the requirements specified
in Section 3 hereof is not satisfied, as determined by the Company in its
sole discretion.
6. LIMITATION
OF LIABILITY. In no event shall the Director be individually liable to the
Company or its shareholders for any damages for breach of fiduciary duty as a
Director of the Company, unless the Director’s act or failure to act involves
intentional misconduct, fraud or a knowing violation of law.
7. AGREEMENT
OF INDEMNITY. The Company agrees to indemnify the Director as
follows:
(a) Subject
to the exceptions contained in Section 8(a) below, if the Director was or is a
party or is threatened to be made a party to any Proceeding (other than an
action by or in the right of the Company) by reason of the Director’s Corporate
Status, the Director shall be indemnified by the Company against all Expenses
and Liabilities incurred or paid by the Director in connection with such
Proceeding (referred to herein as “INDEMNIFIABLE EXPENSES” and “INDEMNIFIABLE
LIABILITIES,” respectively, and collectively as “INDEMNIFIABLE
AMOUNTS”).
(b) Subject
to the exceptions contained in Section 8(b) below, if the Director was or is a
party or is 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 the Director’s
Corporate Status, the Director shall be indemnified by the Company against all
Indemnifiable Expenses.
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(c) For
purposes of this Agreement, the Director shall be deemed to have acted in good
faith in conducting the Company’s affairs as an Director of the Company
and/or a
member of a committee of the Board of the Company, if the Director: (i)
exercised or used the same degree of diligence, care, and skill as an ordinarily
prudent man would have exercised or used under the circumstances in the conduct
of his own affairs; or (ii) took, or omitted to take, an action in reliance upon
advise of counsels or other professional advisors for the Company, or upon
statements made or information furnished by other directors, officers or
employees of the Company, or upon a financial statement of the Company provided
by a person in charge of its accounts or certified by a public accountant or a
firm of public accountants, which the Director had reasonable grounds to believe
to be true.
8. EXCEPTIONS
TO INDEMNIFICATION. Director shall be entitled to indemnification under Sections
7(a) and 7(b) above in all circumstances other than the following:
(a) If
indemnification is requested under Section 7(a) and it has been adjudicated
finally by a court or arbitral body of competent jurisdiction that, in
connection with the
subject of the Proceeding out of which the claim for indemnification has arisen,
(i) the Director
failed to act in good faith and in a
manner the Director reasonably believed to be in or not
opposed to the best interests of the Company, (ii) the Director had reasonable
cause to believe
that the Director’s conduct was unlawful, or (iii) the Director’s conduct
constituted willful
misconduct, fraud or knowing violation of law, then the Director shall not be
entitled to payment
of Indemnifiable Amounts hereunder.
(b) If
indemnification is requested under Section 7(b) and
(i) it
has been adjudicated finally by a court or arbitral body of competent
jurisdiction that, in connection with the subject of the Proceeding out of which
the claim for
indemnification has arisen, the Director failed to act in good faith and in a
manner the Director
reasonably believed to be in or not opposed to the best interests of the
Company, including
without limitation, the breach of Section 4 hereof by the Director, the Director
shall not be
entitled to payment of Indemnifiable Expenses hereunder; or
(ii) it
has been adjudicated finally by a court or arbitral body of competent
jurisdiction that the Director is liable to the Company with respect to any
claim, issue or matter
involved in the Proceeding out of which the claim for indemnification has
arisen, including,
without limitation, a claim that the Director received an improper benefit or
improperly
took advantage of a corporate opportunity, the Director shall not be entitled to
payment
of Indemnifiable Expenses hereunder with respect to such claim, issue or
matter.
9. WHOLLY
OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and
without limiting any such provision, to the extent that the Director is, by
reason of the Director’s Corporate Status, a party to and is successful, on the
merits or otherwise, in any Proceeding, the Director shall be indemnified in
connection therewith. If the Director is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify the Director against those Expenses reasonably incurred by the
Director or on the Director’s behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this section, the termination
of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
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10. ADVANCES
AND INTERIM EXPENSES. The Company may pay to the Director all Indemnifiable
Expenses incurred by the Director in connection with any Proceeding, including a
Proceeding by or in the right of the Company, in advance of the final
disposition of such Proceeding, if the Director furnishes the Company with a
written undertaking, to the satisfaction of the Company, to repay the amount of
such Indemnifiable Expenses advanced to the Director in the event it is finally
determined by a court or arbitral body of competent jurisdiction that the
Director is not entitled under this Agreement to indemnification with respect to
such Indemnifiable Expenses.
11. PROCEDURE
FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. The Director shall submit to the Company a
written request specifying the Indemnifiable Amounts, for which the Director
seeks payment under Section 7 hereof and the Proceeding of which has been
previously notified to the Company and approved by the Company for
indemnification hereunder. At the request of the Company, the Director shall
furnish such documentation and information as are reasonably available to the
Director and necessary to establish that the Director is entitled to
indemnification hereunder. The Company shall pay such Indemnifiable Amounts
within thirty (30) days of receipt of all required documents.
12. REMEDIES
OF DIRECTOR.
(a) RIGHT
TO PETITION COURT. In the event that the Director makes a request for payment of
Indemnifiable Amounts under Sections 7, 9-11
above, and the Company fails to make such payment or advancement
in a timely manner pursuant to the terms of this Agreement, the Director may
petition the appropriate judicial authority to enforce the Company’s obligations
under this Agreement.
(b) BURDEN
OF PROOF. In any judicial proceeding brought under Section 12 (a) above, the
Company shall have the burden of proving that the Director is not entitled to
payment of Indemnifiable Amounts hereunder.
(c) EXPENSES.
The Company agrees to reimburse the Director in full for any Expenses incurred
by the Director in connection with investigating, preparing for, litigating,
defending or settling any action brought by the Director under Section 12 (a)
above, or in connection with any claim or counterclaim brought by the Company in
connection therewith.
(d) VALIDITY
OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding,
including, without limitation, an action under Section 12 (a) above, that the
provisions of this Agreement are not valid, binding and enforceable or that
there is insufficient consideration for this Agreement and shall stipulate in
court that the Company is bound by all the provisions of this
Agreement.
(e) FAILURE
TO ACT NOT A DEFENSE. The failure of the Company (including its Board of
Directors or any committee thereof, independent legal counsel, or stockholders)
to make a determination concerning the permissibility of the payment
of
Indemnifiable
Amounts or the advancement of Indemnifiable Expenses under this Agreement shall
not be a defense in any action brought under Section 12 (a) above.
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13. PROCEEDINGS
AGAINST COMPANY. Except as otherwise provided in this Agreement, the Director
shall not be entitled to payment of Indemnifiable Amounts or advancement of
Indemnifiable Expenses with respect to any Proceeding brought by the Director
against the Company, any Entity which it controls, any director or officer
thereof, or any third party, unless the Company has consented to the initiation
of such Proceeding, This section shall not apply to counterclaims or affirmative
defenses asserted by the Director in an action brought against the
Director.
14. INSURANCE.
The Company may, at its discretion, obtain and maintain a policy or policies of
director and officer liability insurance, in an amount not less than
$[10,000,000], of which the Director will be named as an insured, providing the
Director with coverage for Indemnifiable Amounts and/or Indemnifiable Expenses
in accordance with said insurance policy or policies (“D&O INSURANCE”);
provided that:
(a) The
Director agrees that, while the Company has valid and effective D&O
Insurance, and except as provided in (c) of this section, Sections 7-13 of this
Agreement shall not apply, and the Company’s indemnification obligation to the
Director under this Agreement shall be deemed fulfilled by virtue of purchasing
and maintaining such insurance policy or policies, in accordance with the terms
and conditions thereof and subject to exclusions stated thereon. The Director
agrees that the Company shall have no obligation to challenge the decisions made
by the insurance xxxxxx(s) (“INSURANCE CARRIER”) relating to any claims made
under such insurance policy or policies;
(b) The
Director agrees that the Company’s indemnification obligation to the Director
under (a) of this section shall be deemed discharged and terminated, in the
event the Insurance Carrier refused payment for any Proceedings against the
Director due to the acts or omissions of the Director;
(c) While
the D&O Insurance is valid and effective, the Company agrees that it shall
indemnify the Director for the Indemnifiable Amounts and Indemnifiable Expenses,
to the extent that any Proceedings are coverable by D&O Insurance, but in
excess of the policy amount, in accordance with Sections 7-13 of this Agreement;
and
(d) While
the D&O Insurance is valid and effective, this Section 14 states the entire
and exclusive remedy of the Director with respect to the indemnification
obligation of the Company to the Director under this Agreement.
15. SUBROGATION.
In the event of any payment of Indemnifiable Amounts under
this Agreement or the D&O Insurance, the Company or its Insurance Carrier,
as the case may be,
shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery
of the Director against other persons, and the Director shall take, at the
request of the Company,
all reasonable action necessary to secure such rights, including the execution
of such documents
as are necessary to enable the Company to bring suit to enforce such
rights.
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16. AUTHORITY.
Each party has all necessary power and authority to enter into, and be bound by
the terms of, this Agreement, and the execution, delivery and performance of the
undertakings contemplated by this Agreement have been duly authorized by each
party hereto:
17. SUCCESSORS
AND ASSIGNMENT. This Agreement shall (a) be binding upon and inure to the
benefit of all successors and assigns of the Company (including any transferee
of all or a substantial portion of the business, stock and/or assets of the
Company and any direct or indirect successor by merger or consolidation or
otherwise by operation of law), and (b) be binding on and shall inure to the
benefit of the heirs, personal representatives, executors and administrators of
the Director. The Director has no power to assign this Agreement or any rights
and obligations hereunder.
18. CHANGE
IN LAW. To the extent that a change in applicable law (whether by statute or
judicial decision) shall mandate broader or narrower indemnification than is
provided hereunder, the Director shall be subject to such broader or narrower
indemnification and this Agreement shall be deemed to be amended to such
extent.
19. SEVERABILITY.
Whenever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement, or any clause thereof, shall be determined by a court of
competent jurisdiction to be illegal, invalid or unenforceable, in whole or in
part, such provision or clause shall be limited or modified in its application
to the minimum extent necessary to make such provision or clause valid, legal
and enforceable, and the remaining provisions and clauses of this Agreement
shall remain fully enforceable and binding on the parties.
20. MODIFICATIONS
AND WAIVER. Except as provided in Section 18 hereof with respect to changes in
applicable law which broaden or narrow the right of the Director to he
indemnified by the Company, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No delay in exercise or non-exercise by the Company of any right under
this Agreement shall operate as a current or future waiver by it as to its same
or different rights under this Agreement or otherwise.
21. NOTICES.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered by hand,
(b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed
by certified or registered mail with postage prepaid, on the third business day
after the date en which it is so mailed:
If to
Director, to: 1002 Xx.0 Xxxx Xxxx Xx Xxxx, Xxxx Xxxx Xxxxxxxx, Xxxxxxx,
P.R.C.
If to the
Company, to: 00 Xxxx 00 Xxxxxx, Xxx Xxxx, X.X. 00000 or to such other address as
may have been furnished in the same manner by any party to the
others.
22. GOVERNING
LAW. This Agreement shall be governed by and construed and
enforced under the laws of the [State of New York].
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23. CONSENT
TO JURISDICTION. The parties hereby consent to the jurisdiction of the courts
having jurisdiction over matters arising in [New York County, New York] for any
proceeding arising out of or relating to this Agreement. The parties agree that
in any such proceeding, each party shall waive, if applicable, inconvenience of
forum and right to a jury.
24. AGREEMENT
GOVERNS. This Agreement is to be deemed consistent wherever possible with
relevant provisions of Memorandum of Association and Articles of Association of
the Company; however, in the event of a conflict between this Agreement and such
provisions, the provisions of this Agreement shall control.
25. ARBITRATION.
Any dispute, controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration, before one arbitrator in
accordance with the rules of the [American Arbitration Association] then in
effect and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction. The arbitrator will be selected, by the parties,
from a panel of attorney arbitrators. The parties agree that any arbitration
shall be held in [New York, New York]. The language of the arbitration shall be
in English. The arbitrator will have no authority to make any relief, finding or
award that does not conform to the terms and conditions of this Agreement. Each
party shall bear its own attorneys’ or expert fees and any and all other party
specific costs. Either party, before or during any arbitration, may apply to a
court having jurisdiction for a restraining order or injunction where such
relief is necessary to protect its interests. Prior to initiation of
arbitration, the aggrieved party will give the other party written notice, in
accordance with this Agreement, describing the claim as to which it intends to
initiate arbitration.
26. ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement between the Company
and the Director with respect to the subject matter hereof, and supersedes all
prior understandings and agreements with respect to such subject
matter.
IN
WITNESS WHEREOF, the parties hereto have executed this Director Indemnification
Agreement as of the day and year first above written.
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AGREED
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AGREED
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Xxxxxx
Online Entertainment Ltd.
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Director
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/s/
Xxx Xxxxx
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/s/
Xxx Xxxxx
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Name:
Xxx Xxxxx
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Name:
Xxx Xxxxx
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Title:
Chairman & CEO
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SCHEDULE
A
I POSITION:
DIRECTOR
and Chairman of the Company and the Subsidiary upon request by the
Company.
II. START
DATE: April 1, 2010
III. COMPENSATION:
FEES. For
all services rendered by the Director pursuant to this Agreement, both during
and outside of normal working hours, including but not limited to, attending all
required meetings of the Board or applicable committees thereof, executive
sessions of the Directors, reviewing filing reports and other corporate
documents as requested by the Company and the Subsidiary, providing comments and
opinions as to business matters as requested by the Company and the Subsidiary,
the Company agrees to pay to the Director a fee in cash of $36,000 per annum
(“the Fee”). The Fee shall be payable in cash to the Director monthly in equal
installments. In the event the Company desires to pay the Director on quarterly
basis, the Fee in cash shall be payable to Director quarterly in equal
installments. The Fee also includes the fee for the Director to act as the
Director of the Subsidiary if so requested by the Company.
EXPENSES.
During the term of the Director’s service as a director of the Company, the
Company shall promptly reimburse the Director for all expenses incurred by
him/her in connection with attending (a) all meetings of the Board or applicable
committees thereof, (b) executive sessions of the Directors, and (c) stockholder
meetings, as a director or a member of any committee of the Board, which are
approved by the Company in advance.
STOCK. As
of the date hereof, the Company does not currently maintain any equity incentive
compensation plans. At such time that the Board of Directors of the Company
adopt any such equity incentive compensation plan(s), the Director would be
eligible to participate in such plan(s) according to the terms of the
plan(s).
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NO OTHER
BENEFITS OR COMPENSATION. The Director acknowledges and agrees that he/she is
not granted and is not entitled to any other benefits or compensation from the
Company for the services provided under this Agreement except expressly provided
for in this Schedule A.
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AGREED
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AGREED
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Xxxxxx
Online Entertainment Ltd.
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Director
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/s/
Xxx Xxxxx
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/s/
Xxx Xxxxx
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Name:
Xxx Xxxxx
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Name:
Xxx Xxxxx
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Title:
Chairman & CEO
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