DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Agreement is made and entered into this 8th day of December 2005 (the
"Agreement"), by and between US Global Nanospace, Inc., a Delaware corporation
(the "Company", which term shall include, where appropriate, any Entity (as
hereinafter defined) controlled directly or indirectly by the Company) and Xxxx
X. Xxxxxxxx (the "Indemnitee").
WHEREAS, the Indemnitee has served as an officer of the Company since
August 2005;
WHEREAS, as an officer of the Company, the Indemnitee has been exposed to
significant litigation risks and expenses, and the Company does not currently
carry directors and officers liability insurance;
WHEREAS, in light of the foregoing, the Company desires to provide the
Indemnitee with specific contractual assurance of the Indemnitee's rights to
full indemnification against litigation risks and expenses (regardless, among
other things, of any amendment to or revocation of any the Company's Certificate
of Incorporation or by-laws or any change in the ownership of the Company or the
composition of its Board of Directors); and
NOW, THEREFORE, in consideration of the promises and the covenants
contained herein, the Company and the Indemnitee do hereby covenant and agree as
follows:
1. Definitions.
(a) "Corporate Status" describes the status of a person who is
serving or has served (i) as a director of the Company, including as a member of
any committee thereof, (ii) as an officer of the Company, (iii) in any capacity
with respect to any employee benefit plan of the Company, or (iv) as a director,
partner, trustee, officer, employee, or agent of any other Entity at the request
of the Company. For purposes of subsection (iv) of this Section 1(a), an officer
or director of the Company who is serving or has served as a director, partner,
trustee, officer, employee or agent of a Subsidiary (as defined below) shall be
deemed to be serving at the request of the Company.
(b) "Entity" shall mean any corporation, partnership, limited
liability company, joint venture, trust, foundation, association, organization
or other legal entity.
(c) "Expenses" shall mean all direct and indirect fees, costs and
expenses of any nature whatsoever actually and reasonably incurred in connection
with the investigation, preparation of a defense, appeal of or settlement of any
Proceeding (as defined below), including, without limitation, reasonable
attorneys fees, disbursements and retainers (including, without limitation, any
such fees, disbursements and retainers incurred by the Indemnitee pursuant to
Sections 8 and 11(c) of this Agreement), fees and disbursements of expert
witnesses, private investigators and 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; provided, however, that Expenses
shall not include judgments, fines, penalties or amounts paid in settlement of a
Proceeding.
(d) "Indemnifiable Expenses", "Indemnifiable Liabilities" and
"Indemnifiable Amounts" shall have the meanings ascribed to those terms in
Section 3(a) below.
(e) "Liabilities" shall mean judgments, damages, liabilities,
losses, penalties, excise taxes, fines and amounts paid in settlement.
(f) "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, arbitrative or investigative, whether formal or
informal, whether or not he is serving in such capacity at the time any Expense
or Liability is incurred for which indemnification or reimbursement can be
provided under this Agreement, including a proceeding initiated by the
Indemnitee pursuant to Section 11 of this Agreement to enforce the Indemnitee's
rights hereunder or an action brought by or in the right of the Company.
(g) "Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture, trust or other Entity of which the Company
owns (either directly or through or together with another Subsidiary of the
Company) either (i) a general partner, managing member or other similar interest
or (ii) (A) 50% or more of the voting power of the voting capital stock or other
voting equity interests of any corporation, partnership, limited liability
company, joint venture or other Entity, or (B) 50% or more of the outstanding
voting capital stock or other voting equity interests of any corporation,
partnership, limited liability company, joint venture or other Entity.
2. Services of the Indemnitee. This Agreement shall not impose any
obligation on the Indemnitee or the Company to continue the Indemnitee's service
to the Company beyond any period otherwise required by law or by other
agreements or commitments of the parties, if any.
3. Agreement to Indemnify. The Company agrees to indemnify the Indemnitee
as follows:
(a) Subject to the exceptions contained in Section 4(a) below, if
the Indemnitee 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 Indemnitee's Corporate Status, or by reason of any personal guarantee
provided by the Indemnitee or any Entity controlled by the Indemnitee with
respect to any obligation of the Company, the Indemnitee shall be indemnified by
the Company against all Expenses and Liabilities incurred or paid by the
Indemnitee in connection with such Proceeding (referred to herein as
"Indemnifiable Expenses" and "Indemnifiable Liabilities", respectively, and
collectively as "Indemnifiable Amounts").
(b) To the fullest extent permitted by applicable law and subject to
the exceptions contained in Section 4(b) below, if the Indemnitee 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 Indemnitee's
Corporate Status, the Indemnitee shall be indemnified by the Company against all
Indemnifiable Expenses as well as against any amount paid by Indemnitee in
settlement of the Proceeding.
4. Exceptions 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 145(d) of
the Delaware General Corporation Law whether the Indemnitee has met the
applicable standards of conduct which makes is permissible under applicable law
to indemnify the Indemnitee. If it is determined that the Indemnitee is entitled
to indemnification, the Indemnitee shall be entitled to such indemnification
under Sections 3(a) and 3(b) above in all circumstances other than the
following:
(a) If indemnification is requested under Section 3(a) and it has
been determined that, in connection with the subject of the Proceeding out of
which the claim for indemnification has arisen, the Indemnitee failed to act (i)
in good faith and (ii) in a manner the Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, the Indemnitee had reasonable cause to believe
that the Indemnitee's conduct was unlawful, the Indemnitee shall not be entitled
to payment of Indemnifiable Amounts hereunder.
(b) If indemnification is requested under Section 3(b) and
(i) it has been determined that, in connection with the
subject of the Proceeding out of which the claim for indemnification
has arisen, the Indemnitee failed to act (A) in good faith and (B)
in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, the Indemnitee shall
not be entitled to payment of Indemnifiable Expenses hereunder; or
(ii) it has determined that the Indemnitee 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, no
Indemnifiable Expenses shall be paid with respect to such claim,
issue or matter unless the Court of Chancery or another court in
which such Proceeding was brought shall determine upon application
that, despite the adjudication of liability, but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such Indemnifiable Expenses which such
court shall deem proper.
5. Procedure for Payment of Indemnifiable Amounts. The Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Amounts for
which the Indemnitee seeks payment under Section 3 of this Agreement and the
basis for the claim. The Company shall pay such Indemnifiable Amounts to the
Indemnitee within ten (10) calendar days of receipt of the request. At the
request of the Company, the Indemnitee shall furnish such documentation and
information as is reasonably available to the Indemnitee and necessary to
establish that the Indemnitee is entitled to indemnification hereunder.
6. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that the Indemnitee is, by reason of
the Indemnitee's Corporate Status, a party to and is successful, on the merits
or otherwise, in any Proceeding, the Indemnitee shall be indemnified against all
Expenses reasonably incurred by the Indemnitee or on the Indemnitee's behalf in
connection therewith. If the Indemnitee 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 Indemnitee against all Expenses reasonably incurred by the
Indemnitee or on the Indemnitee's behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Agreement, 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.
7. Effect of Certain Resolutions. Neither the settlement nor termination
of any Proceeding nor the failure of the Company to award indemnification or to
determine that indemnification is payable shall create an adverse presumption
that the Indemnitee is not entitled to indemnification hereunder. In addition,
the termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not create a presumption
that the Indemnitee did not act in good faith and in a manner which the
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Company or, with respect to any criminal action or proceeding, had
reasonable cause to believe that the Indemnitee's action was unlawful.
8. Agreement to Advance Expenses; Conditions. The Company shall pay to the
Indemnitee all Indemnifiable Expenses incurred by the Indemnitee 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, as the same are
incurred. In making any such advance, the ability of the Indemnitee to repay
shall not be a factor. To the extent required by Delaware law, the Indemnitee
hereby undertakes to repay the amount of Indemnifiable Expenses paid to the
Indemnitee if it is finally determined by a court of competent jurisdiction that
the Indemnitee is not entitled under this Agreement to indemnification with
respect to such Expenses. This undertaking is an unlimited general obligation of
the Indemnitee.
9. Procedure for Advance Payment of Expenses. The Indemnitee shall submit
to the Company a written request specifying the Indemnifiable Expenses for which
the Indemnitee seeks an advance under Section 8 of this Agreement, together with
documentation evidencing that the Indemnitee has incurred such Indemnifiable
Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no
later than ten (10) calendar days after the Company's receipt of such request.
10. Selection of Counsel. In the event the Company shall be obligated
under this Agreement to pay Indemnifiable Expenses with respect to any
Proceeding, the Company shall be entitled to assume the defense of such
Proceeding with counsel approved by the Indemnitee, which approval shall not be
unreasonably withheld, upon delivery of written notice to the Indemnitee of the
Company's election to do so. After the Company's assumption of the defense, the
Company shall not be liable to the Indemnitee under this Agreement for any fees
of counsel subsequently incurred by the Indemnitee with respect to such
Proceeding; provided, however, that (i) the Indemnitee shall have the right to
employ his own counsel in any such Proceeding at the Indemnitee's expense; and
(ii) if the Indemnitee shall have reasonably concluded that there may be a
conflict of interest by reason of the representation in such Proceeding of the
Indemnitee and the Company and/or any other defendants by the same counsel, then
the Indemnitee may retain his own counsel with respect to such Proceeding and
the fees and expenses of such counsel shall be an amount for which the
Indemnitee is entitled to indemnification from the Company under this Agreement,
and (iii) if the Company does not retain counsel after assuming the defense of
the Proceeding or if counsel does not vigorously defend the Proceeding, then the
Indemnitee may retain his own counsel with respect to such Proceeding and the
fees and expenses of such counsel shall be an amount for which the Indemnitee is
entitled to indemnification from the Company under this Agreement. The
Indemnitee shall notify the Company in writing of any matter with respect to
which the Indemnitee intends to seek indemnification hereunder as soon as
reasonably practicable following the receipt by the Indemnitee of written notice
thereof. 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,
the Indemnitee shall give the Company such information and cooperation as it may
reasonably require and as shall be within the Indemnitee's power.
11. Remedies of Indemnitee.
(a) Right to Petition Court. In the event that the Indemnitee makes
a request for payment of Indemnifiable Amounts under Sections 3 and 5 above, or
a request for an advance of Indemnifiable Expenses under Sections 8 and 9 above,
and the Company fails to make such payment or advance in a timely manner
pursuant to the terms of this Agreement, the Indemnitee may petition a court of
law to enforce the Company's obligations under this Agreement.
(b) Burden of Proof. In any judicial proceeding brought under
Section 11(a) above, the Company shall have the burden of proving that the
Indemnitee is not entitled to payment of the Indemnifiable Amounts hereunder.
(c) Expenses. So long as the Indemnitee prevails in any action he
files pursuant to Section 11(a) or if the Company and the Indemnitee settle such
action, the Company agrees to reimburse the Indemnitee in full for any Expenses
incurred by the Indemnitee in connection with investigating, preparing for,
litigating, defending or settling any action brought by the Indemnitee under
Section 11(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 11(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 advance of Indemnifiable Expenses
under this Agreement shall not be a defense in any action brought under Section
11(a) above, and shall not create a presumption that such payment or advance is
not permissible.
12. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Indemnitee as follows:
(a) Authority. The Company 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 the Company.
(b) Enforceability. This Agreement, when executed and delivered by
the Company in accordance with the provisions hereof, shall be a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the enforcement of creditors' rights generally.
13. Insurance. In the event the Company obtains directors and officers
liability insurance, the Company shall use its reasonable best efforts to
maintain such coverage in effect and the Indemnitee shall be named as an insured
in such a manner as to provide the Indemnitee the same rights and benefits as
are accorded to the most favorably insured of the Company's officers and
directors.
(a) Inability to Obtain or Maintain Insurance. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain director
and officer liability 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 the 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.
(b) Notice to Insurer. If, at the time of the receipt of a notice of
a claim pursuant to Section 8 hereof, the Company has director and officer
liability 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.
14. Fees and Expenses. During the term of the Indemnitee's service as an
officer or director, the Company shall promptly reimburse the Indemnitee for all
reasonable travel and other reasonable expenses incurred by the Indemnitee in
connection with the Indemnitee's service as an officer or director or member of
any board committee or otherwise in connection with the Company's business.
15. Contract Rights Not Exclusive. The rights to payment of Indemnifiable
Amounts and advancement of Indemnifiable Expenses provided by this Agreement
shall be in addition to, but not exclusive of, any other rights which Indemnitee
may have at any time under applicable law, the Company's by-laws or certificate
of incorporation, or any other agreement, vote of stockholders or directors (or
a committee of directors), or otherwise, both as to action in Indemnitee's
official capacity and as to action in any other capacity as a result of
Indemnitee's serving as a director or officer of the Company.
16. Successors. This Agreement shall be (a) binding upon 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) binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of Indemnitee. This Agreement
shall continue for the benefit of Indemnitee and such heirs, personal
representatives, executors and administrators after Indemnitee has ceased to
have Corporate Status.
17. Subrogation. In the event of any payment of Indemnifiable Amounts
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of contribution or recovery of Indemnitee against
other persons, and Indemnitee 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.
18. Change in Law. To the extent that a change in Delaware law (whether by
statute or judicial decision) shall permit broader indemnification or
advancement of expenses than is provided under the terms of the by-laws of the
Company and this Agreement, Indemnitee shall be entitled to such broader
indemnification and advancements, 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. Indemnitee as Plaintiff. Except as provided in Section 11(c) of this
Agreement and in the next sentence, Indemnitee shall not be entitled to payment
of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect
to any Proceeding brought by Indemnitee 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 Indemnitee in an
action brought against Indemnitee.
21. Modifications and Waiver. Except as provided in Section 18 above with
respect to changes in Delaware law which broaden the right of Indemnitee to be
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 waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement (whether or
not similar), nor shall such waiver constitute a continuing waiver.
22. Notices. Any notice or demand which is required or provided to be
given under this Agreement shall be deemed to have been sufficiently given and
received for all purposes when delivered by hand, telecopy, telex or other
method of facsimile, or five days after being sent by certified or registered
mail, postage and charges prepaid, return receipt requested, or two days after
being sent by overnight delivery providing receipt of delivery, to the following
addresses if to the Company, 0000 X. Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, XX
00000 or at any other address designated by the Company to the Indemnitee in
writing; if to the Indemnitee, at the address set forth below such Indemnitee's
name on the signature page hereto, or at any other address designated by the
Indemnitee to the Company in writing.
23. Governing Law. This Agreement shall be governed by and construed and
enforced under the laws of the State of Delaware without giving effect to the
provisions thereof relating to conflicts of law.
24. Inability of the Company to Indemnify. Both the Company and the
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. The 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 the
Indemnitee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
US Global Nanospace, Inc.
By:
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Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
INDEMNITEE:
/s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
