1
EXHIBIT 10.29
XXXXXX X. XXXXX
000 XXXXXXXXX XXXX
XXXXXX, XXXXXXX X.X.X.
April 12, 1996
CONFIDENTIAL
Xxxxx Microcomputer Products, Inc.
0000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Rinzai Limited
x/x Xxxx Xxxxxxx
00 Xxxxxx Xxxx Xxxx
Xxxxxxxxx 000000
And the Investors Shown on Schedule 1 hereto
RE: INDEMNIFICATION AGREEMENT
Dear Sirs:
This letter will set forth my personal binding obligation and
agreement ("Agreement") to provide indemnification to Rinzai Limited ("Rinzai")
and the other Investors under that certain Agreement and Plan of Merger dated
April 12, 1996 (the "Agreement"), related to any actions, suits, proceedings,
claims or demands of Xxxx X. Xxxxxx, Xxxx Xxxxxxx and Xxxxxxx Xxxxxxx ("Employee
Actions") as set forth below.
1. I acknowledge that Xxxxx Microcomputer Products, Inc.
("Xxxxx") has undertaken to indemnify the Investors
against Employee Actions as provided in Section
7.1(d) of the Agreement. It is my intention by virtue
of this Agreement to provide further indemnification
to the Investors for Employee Actions as stated
below.
2. In the event that the Employee Actions as finally
adjudicated pursuant to a nonappealable order results
in an aggregate liability to the Company, or if the
Employee Actions are settled for an amount, in excess
of $2,000,000 (the "Excess Amount"), then I hereby
agree to indemnify the Investors for such Excess
Amount in the following manner. I will transfer to
each of the Investors a number of shares of my stock
in Xxxxx equal in value to each Investor's
proportional share (based on their relative
2
Xxxxx Microcomputer Products, Inc.
Rinzai Limited
April 12, 1996
Page 2
shareholdings in Xxxxx) of the Excess Amount. The
number of shares of stock shall be determined by
dividing the Excess Amount by the value per share of
the Xxxxx stock at the time of final adjudication of
liability or settlement of the Employee Actions. The
value per share of Xxxxx stock shall be determined as
follows:
(i) If the Company has completed an initial
public offering ("IPO") and its stock is
publicly traded, the value per share shall
be deemed to be the average closing price
per share for each of the twenty (20) days
prior to the final adjudication of liability
or settlement, on NASDAQ/NMS or other
exchange where Xxxxx shares are traded; or
(ii) If Xxxxx has not completed an IPO at the
time of the final adjudication of liability
or settlement, then the value per share of
Xxxxx stock shall be (i) for a period of six
(6) months from the date of the Closing
under the Agreement, US$7.14 and (ii)
thereafter the total value of Xxxxx divided
by the total number of issued and
outstanding shares (on a fully diluted basis
taking into account any then-exercisable
options and warrants). The total value of
Xxxxx shall be determined by the average of
two (2) reputable nationally recognized
appraisers, one selected by Rinzai and one
selected by Xxxxxx X. Xxxxx. The two
appraisers' determinations shall be made in
accordance with appropriate procedures and
protocols to be established by Rinzai and
Xxxxxx X. Xxxxx at the time. For example,
Rinzai and Xxxxxx X. Xxxxx may instruct the
appraisers to give full market value to the
intellectual property estate and patent
estate of Xxxxx for purposes of performing
their valuation of Xxxxx. The appraisers
shall complete their valuation within thirty
(30) days after the date of appointment of
both appraisers and the arithmetic average
of the two valuations determined by the two
appraisers shall be final, binding and
conclusive on the parties.
The total value as established in (ii) above shall be
divided by the total issued and outstanding shares
(on a fully diluted basis taking into account any
then-exercisable options and warrants) of Xxxxx to
arrive at the value per share. The Excess Amount
shall then be divided by the value per share of the
Xxxxx stock determined by either paragraph 2(i) or
(ii) above,
3
Xxxxx Microcomputer Products, Inc.
Rinzai Limited
April 12, 1996
Page 3
and the resulting number of shares shall be
distributed to the Investors in proportion to their
shareholdings as a percentage of all issued and
outstanding shares of Xxxxx.
3. In the event that any shares of stock in Xxxxx are
required to be transferred pursuant to any Employee
Action to any one of the Employees pursuant to a
final, nonappealable court order or settlement, then
I agree to transfer such shares to the Employees from
my own shares and neither the Company nor the
Investors shall have any responsibility for issuing
any new shares to the Employees.
It is understood that the Company will defend all Employee
Actions and will bear the cost of defense of such Employee Actions. It is my
further understanding that I, as Chairman of the Company in complete compliance
with my fiduciary duties as an officer of the Company (which fiduciary duties
shall not be altered or influenced in any way by my obligations under this
agreement), will be responsible for overall direction of the litigation of the
Employee Actions, although any settlement will be subject to approval of the
Board of Directors.
This letter constitutes my binding obligation to indemnify the
Investors as above stated. It is given for valuable consideration in the amount
of Ten Dollars ($10.00), as an inducement to the Investors to enter into the
Agreement and other good and valuable consideration and is given without any
undue influence or duress.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Individually
4
Schedule 1
Kaifa Technology (H.K.) Limited
Lao Hotel (H.K.) Limited
S.P. Quek Investments Pte Ltd.
Saliendra Pte Ltd.
Rolling Profit Holdings, Limited
