DIRECTOR AGREEMENT
This
Director Agreement, (the “Agreement”) dated
as of March 8, 2005 by and between Dwango North America Corp., a company
incorporated under the laws of the state of Nevada (the “Company”), with
its principal executive offices in Seattle, Washington, and Xxxxxx Xxxx,
residing at 00 Xxxxx Xxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 (the “Director”).
WHEREAS, the
Company wishes to cause Director to be elected by the Company, and Director
wishes to be elected, as a member of the Board of Directors of the Company (the
“Board”).
WHEREAS, upon
Director’s election to the Board, the Company wishes to cause Director to be
elected, and the Director wishes to be elected, as the Chairman of the
Board.
WHEREAS, if the
Director is elected by the Company as both a member of the Board and the
Chairman of the Board, the parties wish to provide in this Agreement for the
rights, obligations duties and powers of Director.
NOW,
THEREFORE, in
consideration of the mutual undertakings and premises herein contained, the
parties hereto hereby agree as follows:
1. |
Directorship. |
1.1 |
The
Company hereby agrees to cause the election of Director, and Director
hereby agrees if elected by the Company, to serve as a member of the
Board. |
1.2 |
The
Company hereby agrees to cause the election of Director, and Director
hereby agrees if elected by the Company, to serve as the Chairman of the
Board. Director shall not be an employee of the
Company. |
1.3 |
In
serving as a member and the Chairman of the Board, Director acknowledges
and agrees that during the term hereof acting as a member and the Chairman
of the Board, Director shall comply with all applicable laws and
regulations and the Company’s Articles of Incorporation, By-laws or other
governing instruments or contractual commitments of the Company which
govern or control in any way Director’s rights, powers, duties or
responsibilities as a member and Chairman of the
Board. |
1.4 |
Notwithstanding
anything to the contrary in this Section 1, Director may be removed as a
director and/or as Chairman of the Board at any time in accordance with
applicable law and the Company’s Certificate of Incorporation and Bylaws,
and no provision of this Agreement shall be construed to require the
Company to cause Director to remain on the Board or to continue to serve
as Chairman of the Board for any particular length of time. Likewise,
Director may resign at any time. |
2. |
Scope
of Duties and Powers. |
2.1 |
Director
shall, in his capacity as the Chairman of the Board, preside at all
meetings of the Board and at all meetings of the stockholders and shall
exercise and perform such other powers and duties as from time to time may
be assigned by the Board or prescribed by the By-laws of the Company. In
furtherance, and not in limitation, of the foregoing, Director shall spend
at least one business day per quarter at the headquarters of the Company
in Seattle, Washington and shall make himself available for and be
responsive to telephone calls and e-mails regarding the business of the
Company. |
2.2 |
Director
shall attend (in-person) at least 4 meetings of the Board per year.
Director shall also be available on an as needed basis for telephonic
meetings of the Board. |
2.3 |
Director
shall participate in the selection by the Company of its, among others,
auditors (to the extent he becomes a member of the audit committee) and
legal counsel. |
3. |
Compensation. |
In
consideration of the services provided to the Company by Director hereunder, the
Company shall compensate Director as follows:
3.1 |
While
Director serves as a member of the Board, the Company shall pay Director
$6,000 per month (“Director’s
Fee”).
In addition, the Company shall pay Director for (i) his attendance in
person at meetings of the Board $500 per meeting and (ii) his
participation in telephonic meetings of the Board $250 per meeting, each
as may be adjusted pursuant to the Company’s Director Compensation Plan in
effect from time to time. |
3.2 |
It
is agreed by Director and the Company that the Company shall pay all
expenses incurred by Director in the discharge of Director’s duties under
this Agreement, including, but not limited (a) to first class round-trip
air travel to and from Seattle, Washington and (b) reasonable attorney’s
fees in connection with this Agreement. The Company shall reimburse
Director for expenses incurred by Director in connection with the
performance of Director’s duties and responsibilities hereunder, provided
that such expenses are supported with customary receipts and expense
reports. |
3.3 |
Options. |
(a) |
Pursuant
to the Company’s 2003 Equity Incentive Plan (the “Plan”), Director shall
be granted an option to purchase 300,000 shares of common stock of the
Company upon his initial election to the Board at an exercise price equal
to fair market value (“FMV”) on the date of grant determined in accordance
with the provisions of the Plan. Director’s right to exercise the option
shall vest one-twelfth (1/12) on the date of grant, and one-twelfth on
each three month anniversary of the date of grant until vested in full.
This grant shall be in lieu of any grant to which Director would otherwise
be entitled upon election to the Board. |
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(b) |
Director
shall be entitled to participate, except as set forth in subsection (a)
above with respect to a grant upon election to the Board, in any director
compensation plan of the Company applicable to non-employee directors
generally which is effective during the term of this Agreement.
Notwithstanding the foregoing, the Company shall not be required to
maintain any such plan and may alter the terms and conditions of such plan
at any time and from time to time in its sole
discretion. |
3.4 |
For
the purposes of this Agreement, a “Change
of Control Event”
shall be the occurrence of a single shareholder (or beneficial owner) or
an affiliated group of shareholders (or owners) acquiring more than 50% of
the then outstanding shares of capital stock of the Company entitled to
vote in the election of directors or otherwise acquiring effective control
of the Company. In the event of a Change of Control Event, Director’s
unvested and unexercised options (set forth in Section 3.3 above) shall
immediately vest and become exercisable. |
3.5 |
Immediately
upon Director’s initial election to the Board, the Company shall consult
with Xxxxx & XxXxxxxx or a similar nationally recognized insurance
broker (“Insurance Consultant”) to consider the appropriateness of the
coverage limitation on the Company’s directors and officers insurance
policy (“D&O Policy”). The Board may, but shall not be required to,
increase the Company’s D&O Policy coverage limitation as recommended
by such Insurance Consultant. The Company shall bear all costs related to
the foregoing. |
3.6 |
The
Company shall make available a secretary at its principal executive
offices for the use of Director in connection with the discharge of
Director’s duties under this Agreement and shall bear all costs related
thereto. |
3.7 |
The
Company shall make available an office at its principal executive offices
for Director’s use when in Seattle, Washington in connection with the
discharge of Director’s duties under this Agreement and shall bear all
costs related thereto. |
4. |
Indemnification.
See Appendix A hereto which is made a part of this Agreement to the same
extent as if it had been set forth verbatim
herein. |
5. |
Terms
and Termination. This
Agreement shall become effective on the date hereof and shall continue in
full force and effect so long as Director remains a member of the
Board. |
6. |
Miscellaneous. |
6.1 |
Any
notice under this Agreement shall be in writing and shall be deemed to
have been duly given for all purposes when delivered in person or
transmitted by facsimile transmission with confirmed receipt to the
respective parties, or three days after dispatch by certified mail,
postage prepaid, addressed to the parties at the addresses set forth below
or to such other address of which notice as aforesaid has actually been
received. |
3
If
to Director: |
Xx.
Xxxxxx Xxxx
00
Xxxxx Xxxx Xxxx
Xxxxx
Xxxxx, Xxx Xxxx 00000
and
000
Xxxx 00xx
Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile:
(000) 000-0000 |
with
a copy to: |
Xxxxxx
Xxxx & Priest LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx Xxxxxx, Esq. |
If
to Company: |
0000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
Attention:
Mr. J. Xxxx Xxxxx |
with
a copy to: |
Xxxxxxxx
& Xxxxx, LLP
000
Xxxxxxx Xxxxxxxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxx X. Xxxxxxxx, Esq.
|
6.2 |
Other
than the term and conditions set forth in the Articles of Incorporation,
By-laws or other governing instruments of the Company, this Agreement is
the entire Agreement between the parties with respect to the subject
matter hereof, and supersedes all prior understandings, agreements and
discussions between them, written or oral, with respect to such subject
matter. |
6.3 |
This
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business
and/or assets of the Company), assigns, spouses, heirs, and personal and
legal representatives. The provisions of Article 4 of this Agreement shall
continue in effect regardless of whether Director continues to serve as a
director of the Company or of any other enterprise at the Company's
request. |
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6.4 |
The
provisions of this Agreement shall be severable if any of the provisions
hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by
law. |
6.5 |
This
Agreement shall not be modified or amended except by a written instrument
signed by the parties hereto. No waiver or failure to act with respect to
any breach or default hereunder, subsequent breach or default, whether of
similar or different nature. |
6.6 |
This
Agreement may not be assigned without the written consent of the other
party. |
6.7 |
This
Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York. |
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IN
WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first written
above.
DWANGO NORTH AMERICA CORP. | ||
|
|
|
By: | /s/ J. Xxxx Xxxxx | |
Name: J. Xxxx Xxxxx | ||
Title: Chief Financial Officer | ||
/s/ Xxxxxx Xxxx | ||
Xxxxxx Xxxx |
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APPENDIX
A -- INDEMNIFICATION
1.1 |
Certain
Definitions. |
(a) |
Claim:
shall mean any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the
Company or any other party, that Director in good faith believes might
lead to the institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or
other. |
(b) |
Expenses:
shall include reasonable attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in, any Claim relating to any
Indemnifiable Event. |
(c) |
Indemnifiable
Event: shall mean any event or occurrence related to the fact that
Director is or was a director, officer, employee, agent or fiduciary of
the Company, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another
corporation of any type or kind, domestic or foreign, partnership, joint
venture, trust, employee benefit plan or other enterprise, or by reason of
anything done or not done by Director in such capacity. Without limitation
of any indemnification provided hereunder, Director serving (i) another
corporation, partnership, joint venture or trust of which 10 percent or
more of the voting power or residual economic interest is held, directly
or indirectly, by the Company, or (ii) any employee benefit plan of the
Company or any entity referred to in clause (i), in any capacity shall be
deemed to be doing so at the request of the
Company. |
(d) |
Reviewing
Party: shall be (i) the Board of Directors acting by quorum consisting of
directors who are not parties to the particular Claim with respect to
which Director is seeing indemnification, or (ii), if such a quorum is not
obtainable or, even if obtainable, if a quorum of disinterested directors
so directs, (A) the Board of Directors upon the opinion in writing of
independent legal counsel that indemnification is proper in the
circumstances because the applicable standard of conduct set forth this
Agreement has been met by the Director or (B) the shareholders upon a
finding that the Director has met the applicable standard of conduct
referred to in clause (ii)(A) of this
definition. |
1.2 |
Basic
Indemnification Arrangement. If Director was, is or becomes at any time a
party to, or witness or other participant in, or is threatened to be made
a party to, or witness or other participant in, a Claim by reason of (or
arising in part out of) an Indemnifiable Event, the Company shall
indemnify Director to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written demand is
presented to the Company, against any and all Expenses, judgments, fines
(including excise taxes assessed on Director with respect to an employee
benefit plan), penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection
with, or in respect of, such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Claim. If so requested by Director,
the Company shall advance (within five business days of such request) any
and all Expenses to Director (an “Expense
Advance”).
Notwithstanding anything in this Agreement to the contrary, (i) Director
shall not be entitled to indemnification pursuant to this Agreement if a
judgment or other final adjudication adverse to the Director establishes
that Director's acts were committed in bad faith or were the result of
active and deliberate dishonesty and, in either case, were material to the
cause of action so adjudicated and (ii) Director shall not be entitled to
indemnification pursuant to this Agreement in connection with any Claim
initiated by Director against the Company or any director or officer of
the Company unless the Company has joined in or consented to the
initiation of such Claim. |
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1.3 |
Payment.
Notwithstanding the provisions of Section 1.2, the obligations of the
Company under Section 1.2 (which shall in no event be deemed to preclude
any right to indemnification to which Director may be entitled under
Section 78.7502 of the Nevada Revised Statutes (“NRS”))
shall be subject to the condition that the Reviewing Party shall have
authorized such indemnification in the specific case by having determined
that Director is permitted to be indemnified under the applicable standard
of conduct set forth in Section 1.2 and applicable law. The Company shall
promptly call a meeting of the Board of Directors with respect to a Claim
and agrees to use its best efforts to facilitate a prompt determination by
the Reviewing Party with respect to the Claim. Director shall be afforded
the opportunity to make submissions to the Reviewing Party with respect to
the Claim. The obligation of the Company to make an Expense Advance
pursuant to Section 1.2 shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that Director would
not be permitted to be so indemnified under Section 1.2 and applicable
law, the Company shall be entitled to be reimbursed by for all such
amounts theretofore paid; provided, however, that if Director has
commenced legal proceedings in a court of competent jurisdiction to secure
a determination that Director should be indemnified under applicable law,
any determination made by the Reviewing Party that Director would not be
permitted to be indemnified under applicable law shall not be binding and
Director shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto
(as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has been no determination by the Reviewing Party or if
the Reviewing Party determines that Director substantively would not be
permitted to be indemnified in whole or in part under applicable law,
Director shall have the right to commence litigation in any court in the
State of New York having subject matter jurisdiction thereof and in which
venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect
thereof, and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Director. |
8
1.4 |
Indemnification
for Additional Expenses. The Company shall indemnify Director against any
and all expenses (including reasonable attorneys' fees) and, if requested
by Director, shall (within five business days of such request) advance
such expenses to Director, which are incurred by Director in connection
with any claim asserted or action brought by Director for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or the By-laws or Articles of
Incorporation of the Company now or hereafter in effect relating to Claims
for Indemnifiable Events and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company,
regardless of whether Director ultimately is determined to be entitled to
such indemnification, advance expenses payment or insurance recovery, as
the case may be. |
1.5 |
Partial
Indemnity, Etc. If Director is entitled under any provision of this
Agreement or the By-laws or Articles of Incorporation of the Company now
or hereafter in effect to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Director for the portion
thereof to which Director is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Director has been
successful on the merits or otherwise in defense of any or all Claims
relating in whole or in part to an Indemnifiable Event or in defense of
any issue or matter therein, including dismissal without prejudice,
Director shall be indemnified, to the extent permitted by law, against all
Expenses incurred in connection with such Indemnifiable Event. In
connection with any determination by the Reviewing Party or otherwise as
to whether Director is entitled to be indemnified hereunder, the burden of
proof shall, to the extent permitted by law, be on the Company to
establish that Director is not so entitled. |
1.6 |
Nonexclusivity,
Etc. The rights of the Director hereunder shall be in addition to any
other rights Director may have under the By-laws of the Company, the
Articles of Incorporation of the Company, the NRS or otherwise. To the
extent that a change in the NRS (whether by statue or judicial decision)
permits greater indemnification by agreement than would be afforded
currently under the By-laws of the Company, the Articles of Incorporation
of the Company and this Agreement, it is the intent of the parties hereto
that Director shall enjoy by this Agreement the greater benefits so
afforded by such change. |
1.7 |
Period
of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or on behalf of the Company or any affiliate of the
Company against Director, Director's spouse, heirs, executors or personal
or legal representatives after the expiration of two years from the date
of accrual of such cause of action, and any claim or cause of action of
the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such
two-year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action, such
shorter period shall govern. |
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