HELIX WIND, INC., BOARD OF DIRECTORS SERVICE AND INDEMNIFICATION AGREEMENT
EXHIBIT
10.7
HELIX
WIND, INC.,
BOARD
OF DIRECTORS
THIS
HELIX WIND, INC., BOARD OF DIRECTORS SERVICE AND INDEMNIFICATION AGREEMENT (“Agreement”) is executed and entered
into effective as of _____March_____12th_____________, 2008, by and between
Helix Wind, Inc., a Nevada corporation, (the “Company”) and Xxx Xxxxxxx, an
individual (“Director”), with reference
to the following facts:
A. The
Company has requested that Director serve on its Board of
Directors.
B. In
order to induce Director to serve on the Board, the Company has agreed to pay
Director the compensation (the
“Compensation”) set forth below and to
contractually obligate itself to indemnify Director to the fullest extent
permitted by applicable law so that Director will serve or continue to serve the
Company free from undue concern that he will not be so indemnified; and Director
has agreed to serve on the Board in consideration of the foregoing.
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein, the Company
and Director hereby covenant and agree as follows:
1. Service
By Director. Director agrees to
serve as a member of the Board of Directors of the Company (the “Board”), for the Term, and in
consideration of the Compensation and other terms and conditions of this
Agreement set forth below. Notwithstanding the foregoing, Director
may at any time and for any reason resign from such position, subject to the
provisions of this Agreement and any contractual or other obligation imposed by
operation of law.
1.1 Duties. As a member of the
Board, Director shall use his best efforts to perform the duties commonly
incident to the office and as set forth in the Company Bylaws, including,
without limitation:
1.1.1 attending
or otherwise participating in all regular and special meetings of the
Board;
1.1.2 reviewing
and overseeing the performance of the officers of the Company;
1.1.3 making
himself reasonably available for consultation with the officers of the Company
on a day to day basis, as needed;
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1.1.4 advising
the Company in development and implementation of its strategic development and
business plans;
1.1.5 assisting
the Company in the development of its capitalization plan and securing equity
and debt financing in accordance with such plan;
1.1.6 representing
the Company at industry functions and meetings with potential investors and
business partners; and
1.1.7 doing all
other things reasonably requested by the Board in order to advance the business
and economic interests of the Company and its shareholders.
1.2 Fiduciary
Duty.
Director acknowledges and agrees that in his capacity as a member of the Board,
he has a fiduciary duty to the Company and its
shareholders. Accordingly, Director agrees to use his best
efforts to refrain from and avoid any action or activity that would constitute
or be likely to create a conflict of interest with respect to his duties to the
Company. Director further covenants and agrees to use his best
efforts to comply with and abide by all policies, procedures, guidelines and
governing principles as may be adopted by the Board from time to time; to serve
the Company faithfully and to the best of his ability; and to devote that amount
of time, attention and effort to the Company which is reasonably necessary in
order to satisfy the requirements of the Board.
2. Term.
This Agreement shall be effective as of the date first set forth above (the
“Effective Date”) and shall continue for a period of three (3) years thereafter
(the “Initial
Term”),
terminating on the third anniversary of the Effective Date (the “Termination
Date”). This Agreement
will terminate automatically without the necessity of further notice or action
of any kind upon the Termination Date. Following the expiration of the Initial
Term, Director may be elected to serve on the Board for additional terms,
subject to the approval of the shareholders of the Company, and in such event,
it is anticipated that the Company will enter into a new agreement with
Director.
3. Compensation.
3.1 Annual
Stipend.
Commencing the first month of the second (2nd) year
of your Term, you will receive an annual stipend in the amount of
$10,000, payable in four equal quarterly installments of $2.500 each, in advance
on or before the first day of each calendar quarter throughout your Term. In the
event you are appointed to serve as the Chairman of the Board, you will receive
an additional annual stipend in the amount of $5,000, payable upon
appointment. In the event you are appointed to serve as the
Chairman of any Committee of the Board, you will receive an additional annual
stipend in the amount of $2,500, payable upon appointment. In the
event the Company completes an Initial Public Offering of its common stock (an” IPO”) while you are on the
Board, you will receive a one time bonus equal to $15,000. If you
remain on the Board following completion of the IPO, your annual stipend will
increase to $25,000, payable quarterly at the rate of $6,250 per quarter as
above.
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3.2 Business
Expenses Reimbursements. During the term
of this Agreement, the Company will reimburse Director promptly for all
reasonable, pre-approved business expenses incurred by Director, whether or not
deductible by Company for income tax purposes, including without limitation,
meals, travel, lodging, entertainment, parking, business meetings, and such
other business expenses reasonably incurred by Director in the pursuit and
furtherance of the Company’s business. Such expenses shall be
reimbursed only upon presentation to the Company of appropriate documentation
substantiating such expense.
3.3 Equity
Compensation. Effective upon
execution of this Agreement, Director will be granted a Non-Qualified Option,
pursuant to the Company’s 2008 Omnibus Stock Plan (“2008 Stock Plan”), to
purchase 25,000 shares (the
“Option
Shares”) of the
Company Common Stock at a purchase price of $1.50/share. The terms and
conditions of the Non-Qualified Stock Options shall be set forth in a separate
Notice of Grant and Stock Option Agreement (collectively the “Stock Option
Agreement”) to
be provided by the Company. The Option Shares will vest as follows:
3.3.1 10,000
shares shall vest on the Effective Date of this Agreement;
3.3.2 5,000
shares shall vest upon the 12 month anniversary of this
Agreement;
3.3.3 5,000
shares shall vest upon the 18 month anniversary of this Agreement;
and
3.3.4 5,000
shares shall vest upon the 24 month anniversary of this Agreement.
3.3.5 Notwithstanding
the foregoing, if this Agreement terminates prior to full vesting of the Option
Shares due to Director’s failure to be re-elected to the Board or any
reason other than (i) Director’s Removal for “Cause” as defined in
the Stock Option Agreement, or (ii) Director’s voluntary resignation, all
unvested Option Shares shall immediately vest without further notice or action
of any kind. In the event this Agreement terminates prior to full
vesting of the Option Shares due to Director’s removal for “Cause” as defined in
the Stock Option Agreement, or (ii) Director’s voluntary resignation, all
unvested Option Shares shall immediately be cancelled, as of the effective date
of termination, in accordance with the 2008 Stock Plan and the Stock Option
Agreement.
4. Protection
of Company Property.
4.1 .Restriction
on Use. Director
recognizes and acknowledges that he will have access to Confidential Information
(as defined below) relating to the business or interest of the Company or of
persons with whom the Company may have business relationships. Except
as permitted herein or as may be approved by the Company from time to time, the
Director will not during the Term of this Agreement or at any time thereafter,
use, disclose or permit to be known by any other person or entity, any
Confidential Information of the Company (except as required by applicable law or
in connection with the performance of the Director’s duties and responsibilities
hereunder). If Director is requested or becomes legally compelled to
disclose any of the Confidential Information, he will give prompt notice of such
request or legal compulsion to the Company. The Company may waive
compliance with this section 4 or will provide Director with legal counsel at no
cost to Director to seek an appropriate remedy.
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4.2 Confidential
Information Defined. The term “Confidential Information” means
information relating to the Company’s business affairs, proprietary technology,
trade secrets, patented processes, research and development data, know-how,
market studies and forecasts, competitive analyses, pricing policies, vendor and
supplier lists, employee lists, employment agreements (other than this
Agreement), personnel policies, the substance of agreements with customers,
suppliers and others, marketing arrangements, customer lists, commercial
arrangements, or any other information relating to the Company’s business that
is not generally known to the public or to actual or potential competitors of
the Company (other than through a breach of this Agreement). This
obligation shall continue until such Confidential Information becomes publicly
available, other than pursuant to a breach of this section 4 by the Director,
regardless of whether the Director continues to be employed by the
Company.
4.3 Company
Materials. It is further
agreed and understood by and between the parties to this Agreement that all
“Company Materials,” which include, but are not limited to, computers, computer
software, computer disks, tapes, printouts, source, HTML and other code,
flowcharts, schematics, designs, graphics, drawings, photographs, charts,
graphs, notebooks, test data, appraisals, customer lists, other tangible or
intangible manifestation of content, and all other documents whether printed,
typewritten, handwritten, electronic, or stored on computer disks, tapes, hard
drives, or any other tangible medium, as well as samples, prototypes, models,
products and the like, shall be the exclusive property of the Company and, upon
termination of Director’s employment with the Company, and/or upon the request
of the Company, all Company Materials, including copies thereof, as well as all
other Company property then in the Director’s possession or control, shall be
returned to and left with the Company. Anything in this section 4 to the
contrary notwithstanding, Director shall be entitled to retain his personal
“rolodex” and any Company Materials contained in his personal computer so long
as he does not disclose any Company Materials to any third parties.
5. Indemnification. The Company shall
indemnify Director to the fullest extent permitted by applicable law in effect
on the Effective Date or as such laws may from time to time be amended. Without
diminishing the scope of the indemnification provided by this Section 5, the
rights of indemnification of the Director provided hereunder shall include but
shall not be limited to those rights set forth hereinafter, except to the extent
expressly prohibited by applicable law.
5.1 Action
Other Than by or in the Right of the Company.The Director shall be
entitled to the indemnification rights provided in this Section 5.1 if he is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative in nature, other than an action by or in the right of the Company,
by reason of the fact that he is or was a director, officer, employee, agent,
partner or fiduciary of the Company or is or was serving at the request of the
Company as a director, officer, employee, agent, partner or fiduciary of any
other entity or by reason of anything done or not done by him in any such
capacity. Pursuant to this Section 5.1, the Director shall be indemnified
against all expenses, including attorneys' fees, costs, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding (including, but not limited to,
the investigation, defense or appeal thereof), if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful. The Director
agrees promptly to notify the Company in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any matter which may be subject to indemnification covered
hereunder, either civil, criminal or investigative
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5.2 Actions
by or in the Right of the Company. The Director shall be
entitled to the indemnification rights provided in this Section 5.2 if he is a
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action or suit brought by or in the right of
the Company to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, agent, partner or fiduciary of the Company
or is or was serving at the request of the Company as a director, officer,
employee, agent, partner or fiduciary of any other entity by reason of anything
done or not done by him in any such capacity. Pursuant to this Section 5.2, the
Director shall be indemnified against all expenses, including attorneys' fees
and costs actually and reasonably incurred by him in connection with such action
or suit (including, but not limited to, the investigation, defense, settlement
or appeal thereof) if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company; provided,
however, that no such indemnification shall be made in respect of any claim,
issue or matter as to which applicable law expressly prohibits such
indemnification by reason of an adjudication of liability of the Director to the
Company, unless, and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite such
adjudication of liability but in view of all the circumstances of the case, the
Director is fairly and reasonably entitled to indemnification for such expenses
and costs as such court shall deem proper.
5.3 Indemnification
for Costs, Charges and Expenses. Notwithstanding
the other provisions of this Agreement and in addition to the rights to
indemnification set forth in Sections 5.1 and 5.2 hereof, to the extent that the
Director has served as a witness on behalf of the Company or has been successful
on the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Sections 5.1 and 5.2 hereof, or in defense of any claim, issue or matter
therein, he shall be indemnified against all costs, charges and expenses,
including attorneys' fees, actually and reasonably incurred by him or on his
behalf in connection therewith.
5.4 Partial
Indemnification.
In addition to the rights to indemnification set forth in Sections 5.1
and 5.2 hereof, if the Director is only partially successful in the defense,
investigation, settlement or appeal of any action, suit, investigation or
proceeding described in Section 5.2 or 5.2 hereof, and as a result is not
entitled under Section 5.1, 5.2 0r 5.3 hereof to indemnification by the Company
for the total amount of the expenses, including attorneys' fees, costs,
judgments, penalties, fines, and amounts paid in settlement actually and
reasonably incurred by him, the Company shall nevertheless indemnify the
Director, as a matter of right pursuant to Section 5.3 hereof, to the extent
that the Director has been partially successful.
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5.5 Request
for Indemnification; Presumptions. In order to be
eligible for indemnification pursuant to this Agreement, Director shall promptly
provide written notice regarding the existence of any action, suit, proceeding
or claim (each a “Claim”) for which indemnification
is being sought pursuant to this Agreement, together with a written request for
indemnification to the Board. Such notice shall also include all
documentation or information regarding the Claim which is reasonably available
to the Director. Upon delivery of such written notice and request,
the Director shall be presumed to be entitled to indemnification and shall be
indemnified hereunder.
5.6 Advancement
of Expenses and Costs. All reasonable
expenses and costs incurred by the Director (including attorneys' fees,
retainers and advances of disbursements required of the Director) in connection
with the defense of any Claim shall be paid by the Company in advance of the
final disposition of such Claim, at the request of the Director within ten (10)
days after the receipt by the Company of a statement or statements from the
Director from time to time requesting such advances. Such statement or
statements shall reasonably evidence the expenses and costs incurred by Director
in connection therewith and shall include or be accompanied by an undertaking by
or on behalf of the Director to repay such amount if it is ultimately determined
that the Director is not entitled to be indemnified against such expenses and
costs by the Company as provided by this Agreement or otherwise.
5.7 Remedies
of Director.
In the event that a determination is made that the Director is not
entitled to indemnification hereunder or if expenses are not advanced pursuant
to this Agreement, the Director shall be entitled to a final adjudication in an
appropriate court of the State of California or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, the Director at his option may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association, such award to be made within 60 days
following the filing of the demand for arbitration. In either case, Director
shall be presumed to be entitled to indemnification and The Company shall have
the burden of proof in the making of any determination contrary to such
presumption. In addition, the Company shall not oppose the Director's
right to seek any such adjudication or award in arbitration or any other claim,
but may only oppose the Director's right to indemnification. Such judicial
proceeding or arbitration shall be made de novo and the Director shall not be
prejudiced by reason of a determination (if so made) that he is not entitled to
indemnification. Notwithstanding any other term or provision of this
Agreement, upon the filing of any such action or complaint by Director, pending
final adjudication of the issue, the Company shall pay and advance all
reasonable expenses and costs incurred by Director in accordance with Section
5.6 of this Agreement, as well as all other amounts payable on Director’s behalf
pursuant to Sections 5.1 and 5.2 of this Agreement. If the court or
arbitrator shall determine that the Director is entitled to any indemnification
hereunder, the Company shall pay all reasonable expenses, including attorneys'
fees and costs actually incurred by the Director in connection with such
adjudication or award in arbitration (including, but not limited to, any
appellate proceedings).
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5.8 Other
Rights to Indemnification. The indemnification
and advancement of expenses, including attorneys' fees, and costs provided by
this Agreement shall not be deemed exclusive of any other rights to which the
Director may now or in the future be entitled under any provision of the
by-laws, agreement, provision of the Articles of Incorporation, vote of
stockholders or disinterested directors, provision of law or
otherwise.
5.9 Insurance. The Company shall at
all times during the Term of this Agreement maintain a standard policy of
D&O insurance covering the actions of the Board, including those of
Director, on behalf of the Company, in an amount to be determined by the
Board.
6. General
Provisions.
6.1 Modification
and Waiver.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both 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 hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
6.2 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same agreement.
6.3 Severability. If any provision of
this Agreement (or any portion thereof) is held by an arbitrator or court of
competent jurisdiction to be invalid, illegal or unenforceable for any reason
whatever: (a) such provision shall be limited or modified in its application to
the minimum extent necessary to avoid the invalidity, illegality or
unenforceability of such provision and such modified provision shall be reduced
to a writing and signed by the parties hereto; (b) the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby; and (c) to the fullest extent possible, the
provisions of this Agreement shall be construed so as to give effect to the
intent manifested by the provision (or portion thereof) held invalid, illegal or
unenforceable.
6.4 Notices. Any notice or other
communication in connection with this Agreement may be made and is deemed to be
given as follows: (i) if in writing and delivered in person or by courier, on
the date when it is delivered; (ii) if by facsimile, when received at the
correct number (proof of which shall be an original facsimile transmission
confirmation slip or equivalent); or (iii) if sent by certified or registered
mail or the equivalent (return receipt requested), on the date such mail is
delivered, unless the date of that delivery is not a Business Day or that
communication is delivered on a Business Day but after the close of business on
such Business Day in which case such communication shall be deemed given and
effective on the first following Business Day. Any such notice or communication
given pursuant to this section shall be addressed to the intended recipient at
its address or number (which may be changed by either party at any time)
specified as follows:
7
If
to Company:
Helix
Wind, Inc., Inc.
Attention:
President
0000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxx, XX 00000
Fax:
000.000.0000
If
to Director:
_________________________
_________________________
_________________________
_________________________
6.5 Governing
Law;
Venue. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without regard to conflicts of law principles
thereof. Venue for any suit or action to enforce or interpret this
Agreement shall lie exclusively in the State and Federal courts of San Diego
county, California.
6.6 Attorney
Fees. If
any suit or action is instituted to enforce or interpret this Agreement, the
prevailing party shall be entitled, in addition to the cost of disbursements
otherwise allowed by law, such sum as the court or arbitrator may adjudge
reasonable attorneys’ fees in such suit or action.
6.7 Entire
Agreement.
This Agreement and the exhibit hereto constitute the agreement of the
parties as it relates to this subject matter and does hereby supersede all other
agreements of the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the
parties hereto have executed this Board of Directors Service and Indemnification
Agreement as of the Effective Date.
|
HELIX WIND,
INC.,
a Nevada corporation
|
“Director” | ||||
| /s/ Xxx Xxxxxxx | |||||
| By: | /s/ Xxx Xxxxxx | ||||
| Xxx Xxxxxx, CTO & Chairman | Xxx Xxxxxxx | ||||
| (Print Name) | |||||
8
Amendment
No. 1 to
Director
Indemnification
Agreement
Pursuant to Section 6.1 of
the Director Indemnification Agreement (the “Agreement”) by and between
Helix Wind, Inc., a Nevada corporation ("Helix"), and Xxx Xxxxxxx (the “Director”),
dated March 13, 2008, the parties wish to amend Section 2 of the Agreement
as follows (the “Amendment”):
“2. Term. This Agreement
shall be effective as of the date first set forth above (the “Effective
Date”) and shall continue for a period of three (3) years thereafter (the
“Initial
Term”), subject only to the election by the Company’s stockholders for
each of the three (3) years of such Initial Term or the death or resignation of
the Director. This Agreement will terminate automatically without the necessity
of further notice or action of any kind upon the Termination
Date. Following the expiration of the Initial Term, the Director may
be elected to serve on the Board for additional one (1) year terms, subject to
the annual approval of the stockholders of the Company, and in such event it is
anticipated that this Agreement shall continue in full force and effect, with
such modifications as the parties may deem appropriate from time to
time.”
This
Amendment may be signed in counterparts with the same force and effect as if all
original signatures appeared on one copy; and in the event signed in
counterparts, each counterpart is the equivalent of an original and all of the
counterparts are the equivalent of one agreement.
Facsimile
signatures on notices and amendments are the equivalent of original
signatures.
|
Helix Wind,
Inc.,
a
Nevada corporation
|
Director: | ||
| /s/ Xxxxx Xxxxxxxxxx | /s/ Xxx Xxxxxxx | ||
| Xxxxx Xxxxxxxxxx, President | Xxx Xxxxxxx |
